Australian Dollar Forecast: AUD/USD Rally Rejected at Resistance

Australian Technical Forecast: AUD/USD Weekly Trade Levels

• AUD/USD rebound off support technical support halted at downtrend resistance
• Aussie January range breakout pending- U.S. Core PCE / NFPs on tap
• Resistance 6335/62, 6441 (key), 6511- Support 6146/70 (key), 6007/45, 5795

The Australian Dollar bears are attempting to snap a two-week winning streak with AUD/USD turning sharply from downtrend resistance this week. The focus remains on a breakout of the January range with bear still vulnerable while above the 2022 low. Battle lines drawn on the AUD/USD weekly technical chart into the close of the month.

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 been testing downtrend support for nearly four-weeks and that, “From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to 6362 IF price is heading lower on this stretch with a close below 6170 needed to fuel the next major leg of the decline.”

A false break of support the following week reversed one week later with Aussie rallying more than 3.25% off the lows. The advance faltered this week at the 25% parallel of the descending pitchfork we’ve been tracking off the September high. The focus remains on a breakout of this range above downtrend support with the bears still vulnerable while above the monthly low-close / 2022 low at 6146/70.

Lateral resistance remains unchanged at the 2023 low-week close (LWC) / April low at 6335/62 and is backed by the 38.2% retracement at 6441- note that the median-line converges on this threshold over the next few weeks and a break / close above would be needed to suggest a more significant low was registered this month / a larger trend reversal sis underway. Subsequent resistance objectives eyed at the July close low at 6511 and the 23.6%v retracement of the 2021 decline at 6574.

A break / close below the lower parallel would threaten another bout of accelerated Aussie losses with the next major technical considerations seen at the 2008 low / 78.6% retracement of the 2020 rally at 6007/45 and the 2020 LWC at 5795- both levels of interest for possible downside exhaustion / price inflection IF reached.

Bottom line: A rebound off confluent downtrend support faltered into initial downtrend resistance and keeps the focus on a breakout of the 6146-6362 range for medium-term guidance. From at trading standpoint, rallies would need to be limited to 6441 IF price is heading lower on this stretch with a close below 6146 needed to fuel the next major leg of the decline.

Keep in mind we get the release of the December Core Personal Consumption Expenditure (PCE) tomorrow with the January Non-Farm Payrolls (NFP) report on tap next week. Stay nimble into the release and watch the weekly closes here for guidance. Review my latest Australian Dollar Short-term Outlook for a closer look at 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 X @MBForex