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Australian Dollar Outlook: AUD/USD Break Tests First Aussie Hurdle

Australian Dollar Outlook: AUD/USD Break Tests First Aussie Hurdle

Michael Boutros, Strategist

Australian Dollar Technical Price Outlook: Near-term Trade Levels

  • Australian Dollar technical trade level update – Daily & Intraday Charts
  • AUD/USD correction testing first major technical support- risk for near-term price inflection
  • Near-term support objectives 7618, 7523 Key - Resistance into 7800/36
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The Australian Dollar is virtually unchanged against the US Dollar for the week after rebounding off key support. While the recovery may yet have another leg, the broader risk remains tilted to the downside while below the monthly range highs. 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

Australian Dollar Price Chart - AUD/USD Daily - Aussie Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; AUD/USD on Tradingview

Technical Outlook: In my last Australian Dollar Price Outlook highlighted a weekly range in Aussie just above the monthly open while noting, “the broader threat for a deeper correction while below the yearly high-day close at 7871. A break lower from here exposes 7659 backed by 7618/35- look inflection there…” Aussie dropped into this support zone late-last week and now defines the weekly opening-range lows. Note that price looks poised to attempt an outside-day reversal off the lows today- a warning shot to the bears?

Monthly open resistance stands at 7710 backed by the proposed median-line (currently ~7760s) with key resistance steady at 7801/36. Ultimately a breach / close above the yearly high-day close at 7871 would be needed to mark resumption of the broader uptrend. A break / daily close below Fibonacci support here at 7635 would expose subsequent objectives at the yearly low at 7563 and the 100% extension at 7522- look for a larger reaction there IF reached.

Australian Dollar Price Chart – AUD/USD 120min

Australian Dollar Price Chart - AUD/USD 120min - Aussie Trade Outlook - Technical Forecast

Notes: A closer look at Aussie price action shows AUD/USD trading within a well-defined weekly opening-range between the 7618/35 support zone and monthly open resistance at 7701. Look for the break for near-term guidance with the broader threat for a larger breakdown while below 7836.

Bottom line: The Australian Dollar sell-off is responding to key near-term support here at 7618/35- from a trading standpoint, a good zone to reduce short-exposure / lower protective stops. Look for topside exhaustion ahead of 7800 IF price is indeed heading lower on this stretch. Ultimately, a larger correction may offer more favorable opportunities closer to broader uptrend support. 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

Australian Dollar Trader Sentiment - AUD/USD Price Chart - Aussie Retail Positioning - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.10 (52.29% of traders are long) – neutral reading
  • Long positions are 0.43% higher than yesterday and 13.82% lower from last week
  • Short positions are3.18% lower than yesterday and 3.91% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Yet traders are more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed AUD/USD trading bias from a sentiment standpoint.

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Key Australia / US Data Releases

Key Australia / US Data Releases - Aussie Weekly Event Risk - AUD/USD Economic Calendar

Economic Calendar - latest economic developments and upcoming event risk.

Active Technical Setups

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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