The Australian Dollar is up more-than 1.1% against the US Dollar into the close of the week with price stretching into near-term confluence resistance on Friday. These are the updated targets and invalidation levels that matter on the AUD/USD charts next week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
AUD/USD Daily Price Chart
Technical Outlook: In my latest AUD/USD Weekly Technical Outlook we noted, “Key weekly support stands at 7020/42 – a region defined by the 2019 open and the 50% retracement of the yearly range.” Price registered a low at 7052 into the start of the April trade with the breach above the monthly opening-range high / slope resistance now targeting daily confluence resistance at 7184/97 – (61.8% retracement / 200-day moving average / median-line).
A breach / close above this threshold is needed to keep the long bias viable. Note that daily momentum is testing 60 and further highlights the immediate threat to the advance – look for a reaction here near-term. Monthly open support rests at 7122 with broader bullish invalidation at the highlighted trendline confluence around ~7100.
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AUD/USD 120min Price Chart
Notes: A closer look a price action shows Aussie trading within the confines of a near-term ascending channel formation after breaking out of the multi-week consolidation pattern on Monday. Note that the upper parallel converges on the 7184/97 range and further highlights the near-term significance of this threshold.
A topside breach targets 7215/17 backed closely by the 78.6% retracement of the late-January decline at 7232. Critical resistance stands at 7270/76. Look for initial support along the monthly opening-range high at 7132 backed by 7122– both levels of interest for possible exhaustion/ long-entries IF reached. The weekly range lows rest at 7088– weakness beyond this threshold would look to challenge yearly open support at 7042.
Bottom line: Aussie is trading into a near-term technical resistance confluence and while the immediate advance is vulnerable heading into the close of the week, a break of the monthly opening range does keep the broader focus higher in price while above the monthly open. From a trading standpoint, look for possible exhaustion in this zone with a pullback to offer more favorable long-entries while above the monthly open. Ultimately a breach above 7217 us needed to clear the way for a larger advance targeting 7270/76.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
AUD/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short AUD/USD- the ratio stands at -1.2 (45.5% of traders are long) – weak bullishreading
- Long positions are6.4% lower than yesterday and 5.0% lower from last week
- Short positions are 13.9% lower than yesterday and 7.7% lower 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. Yet traders are less net-short than yesterday & compared with last week and the recent changes in sentiment warn that the current AUD/USD price trend may soon reverse lower despite the fact traders remain net-short.
See how shifts in AUD/USD retail positioning are impacting trend- Learn more about sentiment!
Relevant Australia / US Economic Data Releases
Active Trade Setups
– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex