The Australian Dollar (AUD) is positioned for a potential breakout as AUD/USD trades just above key support near its yearly lows. Following a 7.3% decline from the yearly highs, the pair has entered a contractionary phase, with traders eyeing critical levels for a decisive move.
Technical Overview: AUD/USD Key Levels and Trends
The AUD/USD has found temporary support near 6433, a level that aligns with the 2024 low-day close. Over the past few weeks, the pair has been consolidating within a narrowing range, setting the stage for a breakout. Short-term technical analysis highlights the following key levels:
- Resistance Levels:
- Initial resistance at 6497–6514, which marks the monthly open and the 2024 low-day close.
- Further upside targets include 6582/91 and 6622/28, encompassing the September low, a 38.2% retracement of the late-September decline, and the 200-day moving average.
- A breach above the November high close of 6680 is required to shift momentum in favor of the bulls.
- Support Levels:
- Key support remains at 6433, with additional downside targets at 6401 (2024 low close) and 6362 (April low).
- A breakdown below these levels would signal a resumption of the downtrend, exposing the 6283/96 region, which aligns with the 88.6% retracement of the 2022 advance and the 2023 low close.
Recent Price Action and Outlook
Last week, AUD/USD briefly dipped to 6434 before rebounding, with price action now coiling near the median-line of a descending pitchfork extending from the September high. The multi-week consolidation suggests that the broader downtrend could be vulnerable, provided the pair remains above 6433.
In the near term, the weekly opening range near 6497–6514 is critical. A sustained break above this range could trigger a corrective rally, while a failure to hold support at 6433 would likely accelerate losses.
Broader Market Context
The Australian Dollar remains sensitive to global economic data, including U.S. non-farm payrolls due later this week, which could provide fresh directional cues. Broader risk sentiment and shifts in the U.S. dollar will also influence AUD/USD’s trajectory.
Trading Strategy and Key Considerations
Traders should watch for a breakout of the weekly opening range for immediate guidance. A rally toward the 200-day moving average at 6622/28 could present opportunities for short positions, given the broader bearish bias. However, a close below 6433 would likely confirm the continuation of the downtrend, targeting deeper support levels.
As December unfolds, staying agile and monitoring high-impact economic releases will be crucial. The outcome of the week’s trading sessions, particularly the weekly close, will provide further clarity on AUD/USD’s next major move.
