Aussie Breakout Risks Exhaustion High

AUSTRALIAN DOLLAR TECHNICAL FORECAST – Q1, 2021

Australian Dollar technical trade level update – quarterly forecast
AUD/USD breakout to multi-year highs may be vulnerable into 1Q
Aussie advance remains constructive above 7246 – key resistance into 7800

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Heading into the start of Q4 we highlighted the risk for topside exhaustion in AUD/USD after a breakout of the yearly opening-range fueled a rally into multi-year downtrend resistance. We noted support at a, “key pivot zone at 0.7016/42- a region defined by the objective 2019 / 2020 yearly opens,” with a, “topside breach exposing the 76-handle and beyond.” Aussie briefly registered an intra-week low at 6991 in early November before reversing sharply higher with the rally extending another 8.4% to trade to a high of 7579 ahead of the December close. At the time off this report, AUD/USD has rallied six of the past seven weeks – can the advance carry on into 2021?

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Australian Dollar Price Chart – AUD/USD Monthly

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

Notes:A breakout of the slope-line extending off the 2018 highs keeps the broader focus higher heading into the start of the year with the advance quickly approaching initial resistance at the 38.2% retracement of the 2011 decline at 7635. Note that monthly momentum is extending into levels not seen since the 2011 high and highlights the threat to the immediate long-bias heading into the open of 2021.

Bottom line: The Australian Dollar price rally has matured with an advance of more than 37% off the yearly lows risking topside exhaustion in the months ahead. Upcoming resistance targets are in view heading into the yearly open and we’re on the lookout for inflection on a stretch higher. Get a closer look at the setup as well as the technical invalidation levels that matter heading into 2021 in our latest quarterly guides!