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Australian Dollar Technical Forecast: AUD/USD Plunge Points Lower

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

  • Australian Dollar technical trade level update – Weekly Chart
  • AUD/USD plunges more than 3% off yearly high- threatens resumption of long-term downtrend
  • Aussie resistance 7270/89, 7365/85 (key)- Support 7149, 6991-7016 (Major pivot)
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The Australian Dollar plunged more than 3% off the fresh yearly high’s registered last week with AUD/USD now back below the objective yearly open. A reversal off downtrend resistance threatens resumption of the broader 2021 decline and the focus is on this turn lower heading into the FOMC rate decision later this week. These are the updated targets and invalidation levels that matter on the AUD/USD & AUD/JPY weekly price charts. 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 - Australian Dollar vs US Dollar Trade Oultook - Aussie Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; AUD/USD on Tradingview

Notes: In last month’s Australian Dollar Technical Forecast we note that the AUD/USD, “recovery off key support at the 2021 lows is now approaching the objective 2022 early open- the focus is on a reaction into this zone IF reached.” We got a reaction! A topside breach on March 2nd fueled a rally of more than 2.6% into, “a more significant technical confluence at the 38.2% Fibonacci retracement of the 2021 decline / 2017 May low-week close at 7365/85– note that this threshold converges on the 2021 downslope into the open of Q2 with the 52-week moving average just higher…” Despite an intraweek spike into channel resistance, Aussie was unable to mark a weekly close above this threshold with price reversing sharply last week. Is a near-term high in place?

Initial support now seen at the 61.8% retracement of the 2022 yearly range at 7149. A weekly close below this threshold would be needed to suggest a more significant high is in place with such a scenario risking another run towards key support at the lows around 6991-70. Ultimately, a break / close above last week’s highs would be needed to validate a breakout of the broader 2021 downtrend.

Bottom line: A six-week recovery in the Australian Dollar has reversed off long-term downtrend resistance. The immediate focus is on this turn lower with an exhaustion-low ahead of 7149 needed to keep the recovery viable. From a trading standpoint, look to reduce short-exposure / lower protective stops on a test of basic slope support here- ultimately rallies should be capped by the yearly open / high-week close at 7270/89 IF price is heading lower with a close below 6991 needed to mark resumption of the broader downtrend towards 6660. Stay nimble heading into the Fed rate decision with the event likely to fuel added volatility in the USD majors. 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 - Australian Dollar vs US Dollar Retail Positioning - Aussie Technical Outlook

  • A summary of IG Client Sentiment shows traders are net-long AUD/USD – the ratio stands at +1.16 (53.69% of traders are long) – typically neutral reading
  • Long positions are 14.27% higher than yesterday and 35.58% higher from last week
  • Short positions are5.62% higher than yesterday and 19.93% 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.

Key Australia / US Data Releases

Key Australia / US Data Releases - AUD/USD Economic Calendar - FOMC / Fed Rate Decision- Aussie Employment

Economic Calendarlatest economic developments and upcoming event risk.

Previous Weekly Technical Charts

— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex