Australian Dollar Short-term Outlook: AUD/USD into Resistance

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

• Australian Dollar surges 7.49% off yearly low- price struggling to mount fourth-weekly advance
• AUD/USD rally now testing technical resistance- weekly opening range breakout imminent
• Resistance 6810/19 (key), 6872/93, 6920s– Support 6759/61, 6670/93 (key), ~6611

The Australian Dollar is struggling to mount a fourth-weekly rally with AUD/USD setting the weekly opening-range just below technical resistance. Although the broader outlook remains constructive, the immediate advance may be vulnerable here and we’re looking for possible exhaustion in the days ahead. Battle lines drawn on the AUD/USD short-term technical charts into the close of the month.

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 my last Australian Dollar Short-term Outlook we noted that the rally off fresh yearly lows in AUD/USD was testing resistance around the 61.8% Fibonacci retracement of the July decline at 6627. “Losses should be limited to the monthly open IF price is heading higher on this stretch with a breakout of the weekly opening-range highs needed to mark resumption.” A topside breach the following day fueled another 3% rally with Aussie now up nearly 7.5% off the August low.

The rally has extended into the next major technical consideration here at 6810/19- a region defined by the 2023 & 2024 yearly opens and the 61.8% Fibonacci retracement of the 2023 decline. We’re looking for possible exhaustion / price inflection into this threshold with the immediate advance vulnerable while below.

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 an embedded channel formation with the weekly opening-range intact just below key resistance. Initial support rests with the January and July high-day closes (HDC) at 6759/61 and is backed by the lower parallel (red). Near-term bullish invalidation now raised to the 2019 low / May high-close (HC) at 6670/93- a close below this threshold would be needed to suggest a more significant high is in place and threaten a test of the 200-day moving average, currently near ~6611.

A breach / close above this key pivot zone would be needed to mark uptrend resumption towards the next major hurdle at 6871/93- a region defined by the 38.2% retracement of the 2021 decline, the December high, the June & July 2023 close highs, and the December 2022 swing high. Look for a larger reaction there IF reached. Subsequent resistance objectives eyed at the highlighted slope confluence near ~6920s and the November 2022 low / 2020 Open at 6991-7017.

Bottom line: A three-week rally off the yearly lows is now attempting a fourth weekly advance into technical resistance. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops – losses should be limited to 6670 IF price is heading higher on this stretch with a close above 6819 needed to fuel the next leg of the advance.

Keep in mind we get the release of key US inflation data tomorrow with the July Personal Consumption Expenditure (PCE) on tap into an extending holiday weekend.  Stay nimble into the monthly cross and watch the weekly closes here. 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

Follow Michael on X @MBForex