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Australian Dollar Forecast: AUD/USD Plunges to Technical Support

Australian Dollar Forecast: AUD/USD Plunges to Technical Support

Michael Boutros, Strategist

Australian Dollar Technical Price Outlook: AUD/USD Weekly Trade Levels

  • Australian Dollar technical trade level update - Weekly Chart
  • AUD/USD plummets into key trend support - bears vulnerable while above the weekly lows
  • Aussie risk for inflection into ~7328, key resistance / bearish invalidation at 7531
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The Australian Dollar is poised to mark a fourth consecutive weekly decline as AUD/USD drifts to fresh yearly lows. The losses take price into a critical downtrend support slope and while the broader risk remains weighted to the downside, the immediate decline may be vulnerable in the days ahead. These are the updated targets and invalidation levels that matter on the AUD/USD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie technical setup and more.

Australian Dollar Price Chart – AUD/USD Weekly

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

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

Notes: In last month’s Australian Dollar Weekly Price Outlook we noted that AUD/USD had, “broken below yearly uptrend support with the broader risk weighted to the downside while within this formation.” Aussie rallied into the median-line the following week with price registering a high at 7617 before turning lower – the decline is now pressing deep into the lower parallels of the descending pitchfork formation we’ve been tracking off the yearly highs. This slope converges on a sliding parallel extending off the 2020 low (red) and the May 2017 lows around 7328- the bears are vulnerable near-term while above this threshold.

Weekly resistance now eyed at the 52-week moving average near ~7500 backed closely by the March swing low / median-line at 7531- a breach / weekly close above this threshold would be needed to suggest a more significant low is in place. A break lower from here would risk another bout of accelerated Aussie losses with such a scenario exposing the 1.618% Fibonacci extension of the yearly decline at 7122 and key support at the 2020 & 2019 yearly opens / 38.2% retracement at 7016/52.

Bottom line: The Australian Dollar sell-off has plunged into confluent trend support and leaves the broader short-bias vulnerable while above this key technical threshold- it’s make-or-break here. From at trading standpoint, a good zone to reduce short-exposure / lower protective stops – watch the close here. Be on the lookout for topside exhaustion ahead of the 7531 IF price is still heading lower with a break / close lower exposing objectives into 7200 and beyond. I’ll publish an updated Australian Dollar Price Outlook once we get further clarity on the near-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-long AUD/USD - the ratio stands at +1.75 (63.62% of traders are long) – typically bearish reading
  • Long positions are 4.86% lower than yesterday and 10.35% higher from last week
  • Short positions are1.38% higher than yesterday and 10.71% lower 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 less net-long than yesterday but more 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 - AUD/USD Economic Calendar - Aussie Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical 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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