Aussie is poised to post a weekly doji just above yearly open support. These are the key targets and invalidations levels that matter on the AUD/USD weekly chart.
Looking for a fundamental perspective on AUD? Check out the Weekly AUD Fundamental Forecast.
Aussie is poised to post a weekly Doji against the US Dollar after prices pared the entire post-FOMC rally. These are the updated targets and invalidation levels that matter on the AUD/USD weekly chart heading into the close. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
AUD/USD Weekly Price Chart
Notes: In last month’s AUD/USD Weekly Technical Outlook we noted that price needed to, “stabilize above 7000 for the January recovery to remain viable with a breach / close above 7270 needed to suggest a more significant low is in place.” Price registered a low at 7003 in early-March trade before rebounding with Aussie poised to close virtually unchanged this week on the heels of the FOMC interest rate decision.
Key weekly support stands at 7020/42 – a region defined by the 2019 open and the 50% retracement of the yearly range. A break / close below this threshold would expose the 61.8% retracement at 6955 backed by critical support at the 2016 low / low-week close at 6827/55 – Look for a bigger reaction there IF reached. Resistance & near-term bearish invalidation now lowered to 7233 with a breach above confluence resistance at 7295-7327 needed to shift the broader focus higher in the Australian Dollar targeting the December highs.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: The broader risk remains weighted to the downside sub-7233 for now, with a break / close below yearly open support needed to mark resumption of the broader downtrend. From a trading standpoint, be on the lookout for possible price exhaustion on a move towards the June resistance line. I’ll publish an updated AUD/USD Technical Outlook once we get further clarity in near-term price action.
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AUD/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short AUD/USD – the ratio stands at +1.37 (57.8% of traders are long) – weak bearish reading
- Long positions are13.1% higher than yesterday and 9.0% lower from last week
- Short positions are 19.0% lower than yesterday and 12.4% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Aussie prices may continue to fall. Traders are further net-long than yesterday & 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!
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex