Australian Dollar Short-term Outlook: AUD/USD Coils for Breakout

Australian Dollar Technical Outlook: AUD/USD Short-term Trade Levels

• AUD/USD trading within a tight weekly range just above support- breakout to offer near-term guidance
• Broader outlook remains weighted to the downside while within September downtrend
• Resistance 6521/27, 6542/50 (key), 6569- Support 6478/83 (key), 6434/43, 6404/15

The Australian Dollar is consolidating in a well-defined range just above median-line support, with AUD/USD coiling ahead of key event risk. The broader outlook remains weighted to the downside while within this formation, but the immediate focus is on a breakout here for guidance. Traders are bracing for volatility with U.S. inflation data due Friday and the FOMC interest rate decision on tap next week — events that could drive a decisive move out of this range. Battlelines drawn on the Aussie short-term technical charts.  

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Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Technical Outlook: In my last Australian Dollar Short-term Outlook we noted that, “a reversal off uptrend resistance shifts the focus to a potential test of uptrend support just lower. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stop- rallies should be limited to 6526 IF price is heading lower on this stretch with a close below 6477 needed to fuel a test of the lower parallels.” AUD/USD broke lower two-days later with a decline of more than 2.8% off the October high rebounding sharply off the lower parallel last week. The recovery extended more than 1.3% off the monthly low before exhausting into confluent resistance with this week’s opening-range holding just below. Looking for a potential breakout into the close of the week with major event risk on tap over the next few days.

Australian Dollar Price Chart – AUD/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Notes: A closer look at Aussie price action shows AUD/USD continuing to trade within the confines of a descending pitchfork extending off the yearly high with the weekly opening-range preserved just above the median-line. Initial resistance is eyed at the September low-day close (LDC) / 61.8% retracement of the August advance at 6521/27 and is backed by the 6542/50- a region defined by the 38.2% retracement of the September decline and the 61.8% retracement of the broader 2024 decline. Note that the upper parallel converges on this threshold into the close of the week and a break / close above this slope would be needed to suggest a more significant low is in place / a larger trend reversal is underway. Subsequent resistance eyed at the August high at 6569 and the October open / 2024 September low at 6613/22.

Initial support rests with the 78.6% retracement / September low at 6478/83 with a break below the median-line needed to mark resumption of the broader downtrend. Subsequent support objectives are eyed at the 100% extension of the September decline at 6443 and the 200-day moving average at ~6434. The next major technical consideration rests with the 38.2% retracement of the yearly range / August low at 6404/14- look for a larger reaction there IF reached.