AUD/USD Plummets, Can Bulls Back the Bid?

Australian Dollar Technical Price Outlook: Near-term Trade Levels

Australian Dollar technical trade level update – Daily & Intraday Charts
AUD/USD testing September opening-range lows– risk for correction within broader uptrend
Outlook is lower sub-7295 – critical near-term support 7125

The Australian Dollar working on a third daily decline against the US Dollar with Aussie down more than 3% from the monthly / yearly highs. The risk remains for further losses after breaking uptrend support with price now testing the September range lows. These are the updated targets and invalidation levels that matter on the AUD/USD price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Aussie setup and more.

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Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by Michael Boutros, Technical Strategist; AUD/USD on Tradingview

Technical Outlook: In last month’s Australian Dollar Price Outlook we highlighted in a critical resistance range at, “ the 2019 high / March 2017 low at 7295-7328– a breach / daily close above this region is needed to mark resumption.” Aussie broke through this range into the close of August with price quickly ducking back below in early September trade. This zone continued to offer resistance for nearly three weeks with Aussie breaking below uptrend parallel support yesterday.

The decline is now testing the objective September opening-range low at 7191 and we’re looking for a reaction – a break / close below keeps the focus lower towards channel support extending off the June lows backed closely by a critical Fibonacci confluence at 7125/31. A break / close below this threshold is needed to suggest a larger correction is underway with such a scenario risking a decline towards the 2020 / 2019 yearly opens at 7016/42. Ultimately a topside breach / close above 7328 is still needed to mark resumption of the broader uptrend.

Australian Dollar Price Chart – AUD/USD 120min

Notes: A closer look at Aussie price action shows AUD/USD trading within the confines of a descending pitchfork formationextending of the monthly highs with a rebound off median-line support offering a repreove the recent sell-off today. Initial resistance now at 7234 backed by 7268 and 7295– both zones of interest for possible topside exhaustion IF reached. Initial support steady at the monthly range lows at 7192 backed by 7123/31– look for a larger reaction there IF reached with a break lower risking accelerated Aussie losses towards 7076 and 7042.

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Bottom line: Australian Dollar has broken parallel support and remains at risk for further losses within the broader June uptrend. From a trading standpoint, look for topside exhaustion ahead of 7269 with a break lower keeping the focus on 7123/31– we’ll reassess a price reaction there for guidance IF reached with a break lower risking a larger correction in price. Ultimately, a deeper pullback may offer more favorable opportunism before trend resumption. Review my latest Australian Dollar Weekly Price Outlook for a closer look at the longer-term AUD/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Australian Dollar Trader Sentiment – AUD/USD Price Chart

A summary of IG Client Sentiment shows traders are net-short AUD/USD – the ratio stands at -1.18 (45.92% of traders are long) – neutral reading
Long positions are 2.89% higher than yesterday and 2.92% lower from last week
Short positions are7.64% lower than yesterday and 9.00% 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 and compared with last week. Recent changes in sentiment warn that the current AUD/USD price trend may soon reverse lower despite the fact traders remain net-short.