The Australian Dollar has rallied more than 3% against the US Dollar off the September lows with the advance now testing major downtrend resistance ahead of key event risk this week. These are the updated targets and invalidation levels that matter on the AUD/USD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this oil price setup and more.
Australian Dollar Price Chart – AUD/USD Weekly
Notes: In my last Australian Dollar Weekly Price Outlook we noted that, “Aussie has been in a price range since the August lows with the recent recovery now eyeing confluence resistance at the upper bounds.” AUD/USD has continued to hold just below channel resistance with the FOMC interest rate decision on tap later today and NFPs slated for Friday.
Key resistance remains at the 2016 low-week close / September highs at 6855/95– a breach / close above this threshold is needed to validate the breakout targeting the 61.8% retracement of the July decline at 6927 and the March low at 7003. Weekly support rests with the low-week close at 6768- weakness beyond this threshold would mark resumption of the broader downtrend targeting the yearly lows at 6677.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: AUD/USD is testing yearly downtrend resistance here and leaves the immediate Aussie advance vulnerable sub-6895. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops. Look for a reaction at this zone today for guidance – IF price fails, look for a play off 6768. Review my latest Australian Dollar Price Outlook for a closer look at the near-term AUD/USD technical trading levels.
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 +1.13 (53.15% of traders are long) – neutral reading
- Long positions are 6.23% lower than yesterday and 7.22% higher from last week
- Short positions are4.15% higher than yesterday and 10.59% 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 less net-long than yesterday but more net-long from last week and the combination of current positioning and recent changes gives us a further mixed AUD/USD trading bias from sentiment standpoint.
See how shifts in Aussie retail positioning are impacting trend- Learn more about sentiment!
Previous Weekly Technical Charts
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex