The Australian Dollar plummeted more than 2.2% against the US Dollar since from the October highs with price responding to confluence support this week. While the broader risk remains lower, the immediate focus is on this near-term recovery in price. These are the updated targets and invalidation levels that matter on the AUD/USD price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.
Australian Dollar Price Chart – AUD/USD Daily
Technical Outlook: In my latest Australian Dollar Price Outlook we highlighted, “Key resistance steady at 6880 with a breach / close above needed to fuel the next leg higher in price targeting 6927.” Aussie ripped higher into the close of October with price registering a high at 6929 before turning lower to breaking channel support early in the month. The decline responded to confluence support this week at 6768/70– where the 61.8% Fibonacciretracement of the monthly decline and the yearly low-week close converge on the median-line of the broad descending pitchfork formation we’ve been tracking off the 2017 / 2018 swing highs.
Australian Dollar Price Chart – AUD/USD 120min
Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of a descending pitchfork formation extending of the October highs with the lower parallel further highlighting near-term support at 6768/70. Initial resistance objectives approaching at 6810 and 6830– look for a reaction there IF reached.
A breach above 6830 would shift the focus back to the long-side in price targeting 6850 and 6868. A break below key support at 6768/70 would likely see accelerated losses for Aussie with such a scenario exposing 6745 and the September open at 6724.
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Bottom line: The Australian Dollar sell-off has responded to long-term downtrend support at 6768/70. From at trading standpoint, the immediate focus is on this near-term recovery – look for a reaction / pivot on a stretch towards slope resistance for guidance (ultimately, a breach is favored). Use caution here – this is a big level and a break lower from here would likely see accelerated losses for Aussie. Review my latest Aussie Weekly Price Outlook for a closer look at the longer-term AUD/USD technical trading 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 +1.70 (63.01% of traders are long) – bearish reading
- Long positions are 4.66% higher than yesterday and 20.28% higher from last week
- Short positions are1.44% lower than yesterday and 25.02% 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.
See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!
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– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex