Australian Dollar technical forecast: AUD/USD squeeze at support

Australian technical forecast: AUD/USD weekly trade levels

• Australian Dollar rebounds from fresh, multi-month lows
• AUD/USD threat for exhaustion rebound- broader outlook weighted to the downside
• Resistance 6816, 6865, 6922 (key)– support 6547, 6393 (key), 6200/10

The Australian Dollar plunged nearly 8.3% off the yearly high with the decline turning just ahead of key technical support this week. The focus is on this exhaustion rebound within the confines of the broader 2021 downtrend. 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 noted that AUD/USD had, “stretched into a major pivot zone at confluent resistance and the broader October rally may be vulnerable…” Price reversed sharply lower that very week with Aussie plummeting more than 6.6% off the mid-February highs.

The decline turned just ahead of the support at the 61.8% Fibonacci retracement of the October advance at 6547 (low registered at 6564) with rally now testing the 2008 low-week close / 2019 low at 6670/73. Watch the weekly close with respect to this key pivot zone.

Weekly resistance stands with the yearly-open at 6816 backed by the 52-week moving average (currently ~6865). Broader bearish invalidation now lowered to the yearly high-week close (outside-reversal close) at 6922- a breach / weekly close above would be needed to shift the focus back towards the yearly highs.

A break / weekly close below Fibonacci support here would threaten resumption of the broader downtrend towards the median-line / 2022 October reversal-close at 6393- look for a larger reaction there IF reached.

Bottom line: Aussie has plunged five of the past six-weeks with a break below the yearly-open taking price to multi-month lows. From a trading standpoint, rallies should be capped by the upper parallel the IF Aussie is heading lower – look for a more significant reaction on test of Fibonacci support with a close below needed to mark resumption. I’ll publish an updated Australian Dollar short-term outlook once we get 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

Follow Michael on Twitter @MBForex