Australian Dollar Technical Price Outlook: Near-term Trade Levels
- Australian Dollar technical trade level update – Daily & Intraday Charts
- AUD/USD rally off January low now eyeing yearly range highs- risk for breakout
- Resistance 7270, 7313(key), 7365 - Support 7167, 7086 (critical)
The Australian Dollar surged 1.62% against the US Dollar since the start of the week with AUD/USD now approaching the yearly range highs. The immediate rally may be vulnerable here but losses should be tamed IF Aussie is going to make a run at the highs. 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: In my last Australian Dollar Price Outlook we noted that AUD/USD was, “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” Aussie briefly registered an intraday low at 6967 the following day before reversing sharply into the close of January with price rallying more than 4.5% off that low. Aussie is now probing yearly open resistance at 7270 with the yearly opening-range highs just higher at 7313. Is this a possible double-bottom scenario with the December lows in play here?
Australian Dollar Price Chart – AUD/USD 240min
Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of an ascending pitchfork extending off the December / January lows. An embedded channel off the same low (red) gives some guidance to the rally but the immediate focus today is on a the close with respect to the yearly open with the threat of topside exhaustion while below.
Weekly open support rests just below the channel at 7167 with near-term bullish invalidation set to last week’s low at 7086. A breach beyond today’s high would keep the focus on the objective January opening-range highs at 7313- look for a reaction there with breach likely to fuel another accelerated run towards initial resistance objectives at the 38.2% Fibonacci retracement of the 2021 decline / 100% extension of the late-January rally at 7364/67 and the September 2020 high at 7413.
Bottom line:The Australian Dollar rally is now testing yearly open resistance and leaves the immediate advance vulnerable to exhaustion while below 7270. From at trading standpoint, a good region to reduce portions of long-exposure / raise protective stops- losses should me limited to the weekly open IF price is heading higher on this stretch with a breach / close above the January highs needed to suggest a larger Aussie reversal is underway. Keep in mind the RBA interest rate decision is on tap early next week- stay nimble here. 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-short AUD/USD - the ratio stands at -1.46 (40.64% of traders are long) – typically a weak bullish reading
- Long positions are 8.89% lower than yesterday and 20.89% lower from last week
- Short positions are11.29% higher than yesterday and 21.14% 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.
| Change in | Longs | Shorts | OI |
| Daily | 6% | -6% | 2% |
| Weekly | 0% | 15% | 4% |
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- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
