Australian Dollar Technical Price Outlook: Near-term Trade Levels
- Australian Dollar technical trade level update – Daily & Intraday Charts
- AUD/USD breakdown approaching key technical zone- risk for inflection
- Resistance 7100, 7171(key) - Support 6991-7016 (critical), 6907
The Australian Dollar has plunged more than 2% against the US Dollar this week with the post-FOMC breakdown taking Aussie towards a multi-year technical support pivot zone at the 2021 lows. The focus is on a reaction into this threshold with a close below needed to keep the short-bias viable in the days ahead. These are the updated targets and invalidation levels that matter on the AUD/USD technical price charts into the close of the week. 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: The Australian Dollar broke below confluent support this week at the January 7th low-day close / the December uptrend at 7180 with the post-FOMC sell-off marking an outside-day reversal into the lows yesterday. A break of the monthly opening-range keeps the focus lower in AUD/USD with the sell-off now targeting a critical support zone we’ve been tracking for months at the November low / 2020 yearly-open at 6991-7016- we’re looking for possible price inflection there IF reached.
Australian Dollar Price Chart – AUD/USD 120min
Notes: A closer look at Aussie price action shows AUD/USD trading within the confines a descending pitchfork formation extending off the December / January highs. A break of the weekly opening-range yesterday fueled another leg lower with the lower parallel further highlighting key support at 6991-7016 over the next few days. A break below this threshold could see another accelerated bout of losses for Aussie with such a scenario eyeing initial support objectives at 6907. Resistance now back at 7100 backed closely by the median-line (currently ~7110) with near-term bearish invalidation lowered to the weekly open at 7171.
Bottom line: The Australian Dollar sell-off is approaching key support at a multi-year pivot zone which has sparked major inflections in price (note the December low). From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 7000- rallies should be capped by the median-line IF price is heading lower with a break from here risking another 100pip drop. Stay nimble down here – ultimately a breach / daily close above the yearly open at 7270 would be needed to shift the broader focus higher in Aussie. 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-long AUD/USD - the ratio stands at +1.74 (63.48% of traders are long) – typically a bearish reading
- Long positions are 14.71% higher than yesterday and 9.50% higher from last week
- Short positions are13.10% lower than yesterday and 12.22% 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger AUD/USD-bearish contrarian trading bias from a sentiment standpoint.
| Change in | Longs | Shorts | OI |
| Daily | -3% | -3% | -3% |
| Weekly | 2% | 18% | 5% |
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- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
