Australian Dollar Short-term Outlook: AUD/USD Key Support Test

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

Australian Dollar April rally falters into resistance- rising wedge breakout pending
AUD/USD pullback approaching first key support test- risk for exhaustion / price inflection
Resistance 6761, 6794, 6810/19 (key)– Support 6670/93 (key), 6632, ~6574

The Australian Dollar is on defense early in the week with AUD/USD off more than 1.2% from the monthly high. The decline takes price towards confluent support and the focus is on possible downside exhaustion / price inflection into this key pivot zone in the days ahead. Battle lines drawn on the AUD/USD short-term technical charts.

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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 to be, “on the lookout for possible downside exhaustion while above the 200-day moving average. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – losses should be limited to 6538 IF price is heading higher with a close above 6690 still needed to mark resumption.” Aussie registered an intraday now at 6585 in the following days before finally breaking out into the July open.

Aussie rallied more than 3.3% off the June lows before exhausting into resistance last week at the 61.8% extension of the April rally near 6794- the focus is on a pullback off this mark with multi-month trend support now in view. Looking for a reaction down 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 reversing off confluent resistance with key near-term support eyed at 6670/93- a region defined by the objective monthly open, the 2019 swing low, the 61.8% Fibonacci retracement of the December decline and the objective May high-close. Note that slope support also converges on this threshold over the next few days and losses would need to be limited by this zone IF price is heading higher on this stretch.

Initial resistance eyed at the 2024 high-day close at 6761 and is backed closely again by 6794. Key resistance remains unchanged at the 2024/2023 yearly opens / 61.8% retracement of the broader 2023 decline at 6810/19- look for a larger reaction there IF reached.

A break below the monthly open would expose the July opening-range lows / 38.2% retracement at 6632/34- a close below this threshold would be needed to validate a breakout of the rising wedge pattern and threaten a larger correction towards the 200-day moving average (currently ~6574) and the 61.8% retracement at 6529.

Bottom line: Aussie has responded to confluent resistance and the focus is on this pullback into support. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a move towards 6700 in the days ahead- losses would need to be limited to the monthly open IF price is heading higher here with a close above 6819 ultimately needed to fuel the next major leg in price. That said, the potential for a larger correction remains while below 6800 and a break of this rising wedge formation would threaten a meaningful pullback- watch the weekly close for guidance 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

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