Australian Dollar Technical Price Outlook: Near-term Trade Levels
- Australian Dollar technical trade level update – Daily & Intraday Charts
- AUD/USD monthly reversal testing 2021 downtrend resistance
- Constructive while above-7667 - Key resistance into 7800/36
The Australian Dollar has surged more than 2.7% off the monthly low against the US Dollar with the rally now approaching yearly downtrend resistance. We’re looking for inflection off these levels in the days ahead and the immediate advance may be vulnerable here. These are the updated targets and invalidation levels that matter on the AUD/USD technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Aussie setup and more.
Australian Dollar Price Chart – AUD/USD Daily
Chart Prepared by Michael Boutros, Technical Strategist; AUD/USD on Tradingview
Technical Outlook: In last month’s Australian Dollar Price Outlook noted that the Aussie had responded to, “confluence into the yearly open at the 2018 yearly open / 88.6% Fibonacci retracement of the 2018 decline at 7801/36,” with the broader Aussie advance vulnerable while below this threshold. AUD/USD fell 2.75% into the start of February before rebounding with an outside-day reversal on Friday charging an advance of more than 2.4% this week.
The rally is now probing channel resistance extending off the yearly highs – a breach / close above this trendline would shift the focus back towards the 7801/36 resistance zone. It’s worth noting that price is currently poised to mark an outside-day reversal into the highs – typically highlighting the threat of exhaustion. Initial daily support rests at the median-line backed by the 38.2% retracement of the 2011 decline at 7635 and the monthly open at 7619- a break / close below would risk resumption of the January decline with such a scenario exposing the highlighted trendline confluence near the monthly range lows at 7560s.
Australian Dollar Price Chart – AUD/USD 120min
Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of a near-term ascending pitchfork formation with price probing the 75% parallel in early US trade today. Watch the close here – failure to mount this threshold would further highlight the exhaustion risk. Initial support at 7722 backed by the weekly open at 7667- look for a larger reaction there IF reached. A topside breach would still need to contend with key resistance at the upper parallel / 7801/36.
Bottom line: The Australian Dollar covered more than 78.6% of the year-to-date range with the advance now testing 2021 downtrend resistance. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops – look for inflection here with immediate advance vulnerable into the upper parallels. Ultimately, a pullback may offer more favorable opportunities with a breach / close above 7836 ultimately needed to mark resumption of the broader 2020 rally. Review my latest Australian Dollar Weekly Price Outlook for a closer look at the longer-term AUD/USD technical trade levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Australian Dollar Trader Sentiment – AUD/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-short AUD/USD - the ratio stands at -1.64 (37.82% of traders are long) – typically bullish reading
- Long positions are 0.97% lower than yesterday and 11.21% lower from last week
- Short positions are8.95% higher than yesterday and 12.90% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUD/USD-bullish contrarian trading bias from a sentiment standpoint.
| Change in | Longs | Shorts | OI |
| Daily | 2% | 3% | 2% |
| Weekly | 29% | -46% | 0% |
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
