AUD : Hitting Resistance

(Tue, 22 Dec 2020). The Australian Dollar rallied more than 4% against the US Dollar in December with AUD/USD turning from long-term Fibonacci resistance at multi-year highs last week. While the broader outlook remains constructive on the back of the recent breakout, the advance may be vulnerable heading into the close of the year as Aussie approaches uptrend resistance targets just higher. These are the updated targets and invalidation levels that matter on the AUD/USD weekly price chart heading into the close of the year.

AUSTRALIAN DOLLAR PRICE CHART – AUD/USD WEEKLY

Notes: In my last Australian Dollar Weekly Price Outlook we noted that Aussie had, “cleared a major resistance confluence last week - the immediate focus is on a break of the 7300-7413 range for guidance with a close above needed to mark resumption towards fresh multi-year highs.” AUD/USD ripped higher days later with the breakout rallying for five consecutive weeks to fresh yearly highs before stalling last week at the 38.2% Fibonacci retracement of the 2011 decline at 7635.

Initial weekly support rests with the slope parallel extending off the late-June lows / December 2017 lows at 7503 with the broader outlook constructive while above 7246/95. A break / weekly close below this threshold would be needed to suggest a more significant high is in place. A breach higher from here exposes subsequent resistance objectives at the 2018 objective yearly open / upper parallel near ~7800 – look for a larger reaction there IF reached for guidance.

Bottom line: The Australian Dollar breakout has extended into the first major resistance target since breaching the yearly range highs and the immediate advance may be vulnerable in the days ahead. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops- be on the lookout for downside exhaustion ahead of channel support / 7295 IF price is indeed heading higher. Ultimately a larger pullback here may offer more favorable opportunities closer to uptrend supportwith a topside breach keeping the focus on 7800.

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