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Australian Dollar Forecast: AUD/USD Rips - Breakout Levels

Australian Dollar Forecast: AUD/USD Rips - Breakout Levels

Michael Boutros, Strategist

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

  • Australian Dollar technical trade level update - Weekly Chart
  • AUD/USD rally enters fourth week – risk for price inflection into key technical confluence
  • Aussie key resistance into 7531/42, Support 7385, 7328- bullish invalidation at 7226
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The Australian Dollar surged more than 4.4% against the US Dollar since the September lows with AUD/USD ripping to fresh three-month highs today in US trade. The breakout keeps medium-term focus higher in Aussie in the days ahead as the bulls eye a key technical confluence just higher. 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 the Aussie, “pullback is at a major pivot zone – looking for inflection off this threshold. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – on the lookout for possible downside exhaustion ahead of 7248 IF price is still heading higher.” AUD/USD registered an intraweek low at 7169 but held this critical zone into the end of the week with the low-week close registering at 7266- a textbook exhaustion signal.

The subsequent rally is attempting to breach confluent resistance today at the 38.2% Fibonacci retracement of the yearly range / medina-line of the descending pitchfork we’ve been tracking off the yearly highs at 7450- watch the weekly close with respect to this threshold. The next major resistance objective is eyed at the March swing lows / 52-week moving average / 100% extension at 7531/42– area of interest for possible topside exhaustion IF reached. Weekly support rests back at the May 2017 low-week close at 7385 backed by 7328 with a break below the objective October open at 7226 ultimately needed to shift the focus back to the downside.

Bottom line: The Australian Dollar rally in its fourth consecutive week with a breakout above confluent resistance today keeping the focus on longer-term downtrend resistance. From a trading standpoint, look to reduce long-exposure / raise protective stops on a stretch into key resistance at 7531/42- look for possible inflection there IF reached. Respect the weekly close- failure to hold 7450 could fuel a near-term pullback and losses should be limited to 7385 to keep the immediate long-bias viable with a topside breach exposing downtrend resistance, (currently near ~7620s). 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-short AUD/USD - the ratio stands at -1.51 (39.89% of traders are long) – neutral reading
  • Long positions are 10.99% lower than yesterday and 18.38% lower from last week
  • Short positions are5.91% higher than yesterday and 13.50% 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.

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Key Australia / US Data Releases

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

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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