- December 1, 2019
- Posted by: Trading
- Category: Alerts
AUSTRALIAN DOLLAR CHART FORECAST: AUD/USD, AUD/JPY EYE POTENTIAL SELLOFF AS GBP/AUD PUSHES TO FRESH YEAR-TO-DATE HIGHS
- AUD price action has come under pressure throughout November with AUD/USD sinking 2.12% last month while AUD/JPY slid roughly 0.75% and GBP/AUD jumped 2.15%
- The Aussie could be gearing up for its next selloff amid deteriorating bullish conviction and lack of technical support levels to keep the Australian Dollar afloat
- Australian Dollar sentiment details Aussie currency traders remain net-long AUD/USD and AUD/JPY despite the unnerving risk of a breakdown in US-China trade talks or dovish RBA action
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The Australian Dollar has been battered over the last several trading sessions as US-China trade talk progress comes under question and speculation over further dovish RBA policy action largely drove the Aussie lower. These fundamental drivers – if further materialized – have serious potential to exert additional downward pressure on the Australian Dollar.
This is considering technical support is sparse on the AUD price charts which could cause selling in the Australian Dollar to accelerate and edge toward fresh multi-year lows against its major counterparts like the US Dollar, Japanese Yen and British Pound.
AUD/USD PRICE CHART: DAILY TIME FRAME (JULY 07, 2019 TO NOVEMBER 29, 2019)
I noted in my last Australian Dollar Forecast published roughly two weeks ago that AUD/USD could see a sustained breakdown if the 0.6800 handle gave way.
Bearish momentum now appears at risk of reaccelerating with spot AUD/USD prices currently gravitating around 0.6760 and below its 61.8% Fibonacci retracement of the October 02 to October 31 rally.
That said, if Australian Dollar bulls fail to cling onto this key level of confluent support, the 0.6700 level and year-to-date lows may quickly come into focus. Potential rebound attempts may prove to be short-lived with the 0.6800 handle serving as an intimidating level of technical resistance.
AUD/JPY PRICE CHART: DAILY TIME FRAME (JUNE 13, 2019 TO NOVEMBER 29, 2019)
Spot AUD/JPY prices seem to be teetering on the ‘edge of a cliff’ depicted by the ascending supporttrendline connecting the August 25, October 09 and November 14 intraday swing lows. This technical level of confluence is also highlighted by the currency pair’s 50-day simple moving average, which so far seems to have kept the Australian Dollar bid against its JPY-counterpart.
If this area around the 74.000 handle – roughly noted by the 61.8% Fib of AUD/JPY’s trading range since the June 30 intraday peak – fails to provide buoyancy to the Aussie going forward, however, spot prices could drift lower for a retest of the November low and 100-DMA.
Below this area opens up the door for selling pressure in the Australian Dollar to steer spot AUD/JPY prices toward technical confluence around 71.500, which is roughly underpinned by its 23.6% Fib. Evidence of this unfolding could be shown by negative divergence on the MACD indicator and the RSI starting to stretch lower again.
GBP/AUD PRICE CHART: WEEKLY TIME FRAME (FEBRUARY 18, 2018 TO NOVEMBER 29, 2019)
Spot GBP/AUD prices are trading at their highest level since June 2016. The most recent jump in spot GBP/AUD was due largely by a spike in the British Pound as a YouGov Poll Predicted a Tory Majority and stands to provide a healthy tailwind for upward momentum to continue over the near term.
While GBP/AUD could seem overextended owing to the latest push to the upside – driven primarily by an influx of Brexit optimism and growing skepticism over a phase one trade deal between the US and China – the Sterling has potential to keep extending higher relative to the Australian Dollar.
The Bollinger Band expansion may help facilitate further advances in spot prices while there still seems room to run higher before running into the 127.2% Fibonacci extension of the May to July slide recorded by GBP/AUD.
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