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Australian Dollar Outlook: AUD/USD Plunges into Multi-Month Support

Australian Dollar Outlook: AUD/USD Plunges into Multi-Month Support

Michael Boutros, Strategist

Australian Dollar Technical Price Outlook: Near-term Trade Levels

  • Australian Dollar technical trade level update – Daily & Intraday Charts
  • AUD/USD approaches multi-week range / slope support
  • Near-term support 7700, 7675(key) – resistance / bearish invalidation 7770
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The Australian Dollar is on defensive against the US Dollar post-RBA with AUD/USD down more than 0.7% in early US trade. The decline takes Aussie with in striking range of key support at multi-week range lows and we’re looking for possible price inflection here early in the month. 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 last month’s Australian Dollar Price Outlook we noted that the AUD/USD, “breakout is now approaching initial uptrend resistance objectives. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch towards the upper parallel / 7800 – an area of interest for possible price inflection / exhaustion IF reached.” Aussie registered an intraday high at 7817 before faltering with the pullback now testing multi-week range support at the 7701/08 technical confluence- a region defined by the 38.2% Fibonacci retracement of the April range and the objective 2021 yearly open. Note that that multi-month trendline support rests just lower and a break / close below would be needed to suggest a larger turn is underway. Key resistance steady at the 2018 yearly open / 61.8% retracement of the yearly range at 7801/25.

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 the confines of a descending pitchfork formation extending off the April highs with the weekly opening-range taking shape just above the 77-handle. Initial resistance stands at 7757 with near-term bearish invalidation now lowered to the 7771. A break lower from here would expose subsequent support objectives at the 50% retracement / median-line at ~7675 backed by the 61.8% retracement at 7641- look for a larger reaction there IF reached.

Bottom line: The Australian Dollar is testing the lower-bounds of a multi-week price range with the monthly opening-range taking shape just above slope support- we’re on breakout watch. From at trading standpoint, a good zone to reduce short exposure / lower protective stops – be on the lookout for topside exhaustion ahead of the upper parallel IF price is indeed heading lower with a break / close below 7675 needed to mark resumption of the late-April sell-off. 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 Outlook
  • A summary of IG Client Sentiment shows traders are net-short AUD/USD - the ratio stands at -1.18 (45.84% of traders are long) – neutral reading
  • Long positions are 10.23% lower than yesterday and 15.46% higher from last week
  • Short positions are14.13% higher than yesterday and 17.56% lower 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 more net-short than yesterday but less net-short from last week. 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 - AUD/USD Economic Calendar - Aussie Event Risk

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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