Australian Dollar Forecast: AUD/USD Bulls Retreat from Resistance

Australian Technical Forecast: AUD/USD Weekly Trade Levels

• Australian Dollar rally exhausts into confluent uptrend resistance- NFPs on tap
• AUD/USD October rally vulnerable near-term- broader outlook remains constructive
• Resistance 6816/19, 6922, 7000- Support 6439/73 (key), ~6600, 6500

The Australian Dollar is attempting to snap a three-week rally with AUD/USD trading more than 1.4% off the December high into the start of 2024. The October advance exhausted into uptrend resistance last-week and while the broader outlook is still constructive, the threat remains for possible weakness early in the month. The battle-lines are drawn into the January-open with US Non-Farm Payrolls on tap Friday. These are the updated targets and invalidation levels that matter on the AUD/USD weekly technical chart.

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Australian Dollar Price Chart – AUD/USD Weekly

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

Technical Outlook: In last month’s Australian Dollar Technical Forecast we highlighted that AUD/USD had rallied into confluent resistance around the yearly moving average while noting, “losses should be limited to channel support IF price is heading higher with a close above 6674 needed to fuel the next leg in price.” A topside breach / weekly-close on December 15^th fueled a rally of more than 2.5% with Aussie testing uptrend resistance into the close of the year at the 2023 yearly-open / 61.8% Fibonacci retracement of the 2023 range around 6816/19. The bulls have been unable to mark a weekly-close above this threshold and leaves the October uptrend vulnerable while below – looking for possible price inflection here.

A topside breach above this key pivot zone exposes the 2023 high-week close (HWC) at 6922- a breach / weekly-close above this threshold is needed to fuel the next leg higher towards subsequent resistance objectives at the 70-handle and the 2013 trendline (currently near 7050s).

Initial weekly support rests at 6639/73 – a region now defined by the 52-week moving average, the 38.2% retracement of the October rally, the 2008 low-week close (LWC) and the 2019 swing low. Note that the technical outlook remains constructive while above the October trendline (currently ~6600) with a close below the 61.8% retracement at 6500 ultimately needed to put the bears in control.

Bottom line: AUD/USD is trading just below confluent uptrend resistance for a third-consecutive week – risk for topside exhaustion while below this key pivot zone. From a trading standpoint, a good area to reduce portions of long-exposure / raise protective stops – losses should be limited to 6641 IF price is heading higher on this stretch with a close above 6922 ultimately needed to fuel uptrend resumption. Keep in mind we get the release of US non-farm payrolls into the close of the week- stay nimble into the January opening-range. I’ll publish an updated Australian Dollar Short-term Outlook once we have further clarity on the near-term AUD/USD technical trade levels.

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

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