Australian Dollar Technical Forecast: AUD/USD Rally Rips into Resistance
Australian Dollar Technical Price Outlook: AUD/USD Weekly Trade Levels
- Australian Dollar technical trade level update - Weekly Chart
- AUD/USD rebound off downtrend support testing resistance– risk for price inflection
- Aussie resistance 6991-7016 (key) 7188-7207- Support 6792 (critical), 6660/70, 6461
The Australian Dollar rallied nearly 5% off the yearly lows against the US Dollar with AUD/USD reversing off downtrend support earlier in the month. A two-week recovery now takes Aussie into the first technical downtrend resistance zone and we’re looking for a reaction here into the close of the week / month for guidance. Is this just a bear-market bounce or is there a larger correction underway? These are the updated targets and invalidation levels that matter on the AUD/USD weekly technical 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
Notes: In my last AUD/USD Weekly Technical Forecast we noted that AUD/USD was, “testing downtrend support on building momentum divergence for nearly four weeks now and the immediate short-bias may be vulnerable while above the lower parallel. From at trading standpoint, rallies should be capped by 7000 IF price is still heading lower on this stretch…” Aussie turned sharply off trend support with a two-week rally now testing key resistance at 6991- 7016- a region defined by the November 2020 swing low, the objective 2020 yearly open, the 2021 lows and the January low-week close. We’re looking for price inflection into this zone.
A topside breach / weekly close above would be needed to suggest a larger correction is underway here with such a scenario exposing the 38.2% retracement / May high-week close / 52-week moving average at 7188-7207. Support now rests with the low-week close at 6792 – note that a break / close below this threshold could threaten another accelerated decline for the Aussie with initial support objectives eyed at the 2008 low-week close / 2019 low at 6660/70 and the 61.8% Fibonacci retracement of the entire 2020 rally at 6461.
Bottom line: A rebound off downtrend support takes AUD/USD into the first major downtrend resistance zone – looking for possible price inflection up here. From a trading standpoint, a good zone to reduce short-exposure / raise protective stops – watch the weekly / monthly close with respect to 6991-7016 for guidance. 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
- A summary of IG Client Sentiment shows traders are net-long AUD/USD - the ratio stands at +1.17 (53.96% of traders are long) – typically weak bearish reading
- Long positions are 4.09% lower than yesterday and 10.58% lower from last week
- Short positions are5.85% lower than yesterday and 9.74% higher 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 more net-long than yesterday but less net-long from last week. From a sentiment standpoint, the combination of current positioning and recent changes gives us a further mixed AUD/USD trading bias.
Economic Calendar - latest economic developments and upcoming event risk.
Active Weekly Technical Charts
- Crude Oil (WTI)
- British Pound (GBP/USD)
- US Dollar Index (DXY)
- Canadian Dollar (USD/CAD)
- Euro (EUR/USD)
- Gold (XAU/USD)
- S&P 500, Nasdaq, Dow
- Silver (XAG/USD)
--- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.