Australian Dollar Short-term Outlook: AUD/USD at Major Resistance

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

Australian Dollar rallies 5% off yearly low to fresh multi-month highs
AUD/USD testing technical resistance post-CPI - risk for exhaustion / price inflection
Resistance 6673/90 (key), 6770s, 6810/19– Support 6489/91, 6453, 6399-6403 (key)

The Australian Dollar is poised to mark a third-consecutive daily advance with AUD/USD trading to levels not seen since January. Today’s post-CPI rally is testing the first major resistance hurdle and the immediate focus is on a reaction here. The battle lines are drawn heading into the close of the week- these are the updated targets and invalidation levels that matter on the AUD/USD short-term technical chart.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this AUD/USD technical setup and more. Join live on Monday’s at 8:30am EST.

Australian Dollar Price Chart – AUD/USD Daily

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

Technical Outlook: In last month’s Australian Dollar Short-term Outlook we noted that a massive daily reversal had covered nearly the entire range and kept the focus on a break below, “6489/91- losses below this threshold would threaten resumption of the broader downtrend towards the yearly low-day close (LDC) at 6453 and the 78.6% retracement of the October rally / 61.8% Fibonacci extension of the December decline at 6399-6403.” Aussie broke down just two-days later with price failing to close below this key threshold (close low registered 6401, intraday low briefly registered at 6362).

Aussie has now rallied 5% off those lows with AUD/USD spiking into confluent resistance today post-CPI. The level in focus is 6673/90- a region defined by the 2008 low-week close (LWC), the 2019 low, the 61.8% Fibonacci retracement of the late-December decline, and the 100% extension of the April rally. The immediate advance may be vulnerable below this threshold- watch the daily / weekly close here.

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 trading within the confines of an ascending pitchfork formation with and embedded channel offering further guidance on the most recent advance. Today’s post-CPI rally takes price into confluent resistance and the immediate focus is on today’s close with respect to this threshold.

Weekly open support rests at 6602 with a break below this channel threatening a deeper pullback towards the 50% retracement / 200-day moving average at 6520- losses should be limited to this threshold IF price is heading higher on this stretch. Ultimately, a break below the objective monthly open at 6473 would be needed to put the bears back in control.

A topside breach / close above 6690 is needed to suggest more significant low was registered last month. Such a scenario would open the door to a larger breakout towards the highlighted slope confluence near ~6770s and key resistance at the objective 2023/2024 yearly opens / 61.8% retracement of the 2023 decline at 6810/19- look for a larger reaction there IF reached.

Bottom line: A 5% rally off the yearly low is now testing the first major resistance hurdle- risk for possible topside exhaustion / price inflection here. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 6520 IF price is heading higher on this stretch with a close above 6690 needed to mark uptrend resumption. Review my latest Australian Dollar Weekly Forecast for a closer look at the longer-term AUD/USD technical trade levels.

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Written by Michael Boutros, Sr Technical Strategist with FOREX.com

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