Australian Dollar Strength Falls Apart, Can AUD/CAD Breakout Last?

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Australian Dollar Technical Forecast

  • Strength in the Australian Dollar largely fell apart this past week
  • AUD/USD may be heading for declines, confirmation is needed
  • AUD/NZD consolidation extends, AUD/CAD attempts breakout

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In this week’s vote, the most requested Aussie cross to cover was AUD/NZD. Tied for second place was AUD/CAD and AUD/JPY. Of those two, I will be covering the former as I think it is more interesting technically. If you would like to participate in each week’s poll and for the opportunity to break ties, follow me on twitter @ddubrovskyFX.I will post timely updates on the Aussie Dollar there as well.

Looking for a fundamental perspective on Australian Dollar? Check out the Weekly AUD Fundamental Forecast.

AUD/USD Technical Outlook: Slightly Bearish

The near-term uptrend in the Australian Dollar quite literally fell apart this past week. AUD/USD descended through a rising trend line as it cleared a horizontal range of support between 0.71645 – 0.71452. However, the pair appeared to struggle achieving a daily close under the January 24 low at 0.7081. This further reinforced this area as support.

A descent through it would probably be the confirmation needed to argue technically that the pair may extend its declines. This places near-term support as a range between 0.70211 and 0.69819 next. Meanwhile, a climb back above resistance would expose the late January/early February highs (0.72729 – 0.73). With that in mind, the AUD/USD technically outlook appears slightly bearish.

AUD/USD Daily Chart

AUD/USD

AUD/NZD Technical Outlook:Neutral

Since bottoming in December, AUD/NZD has been struggling to pick a direction. This is despite the rally on Wall Street which reinforces the pair’s fundamental trait as a ‘risk-neutral’ currency pair. Technically, near-term support has been further reinforced as a horizontal range between 1.04347 and 1.04520. That area has consistently prevented declines over the past two months.

As such, a daily close under this area would probably be a good warning sign that the pair may enter a downtrend. That would require confirmation. Meanwhile resistance appears to be at 1.05439. A climb through it exposes a descending trend line from August. Taking this into consideration, the neutral outlook in AUD/NZD prolongs.

AUD/NZD Daily Chart

AUD/NZD

AUD/CAD Technical Outlook:Bearish

The support area of the consolidation range in AUD/CAD highlighted last week broke, exposing the pair to potential declines in the days ahead. Interestingly, the turn lower on February 6 was immediately followed by a rebound back up to consolidation support (now resistance). That held and now the pair is facing lower as of the end of this past week.

AUD/CAD Daily Chart

AUD/CAD

If we zoom out on the weekly chart, the turn lower in AUD/CAD is more noticeable. On this chart, performance can foreshadow more longer-term trends. In this case, declines are anticipated, as outlined in my top trading opportunities of this year.

Declines have immediate support as the 2016 low at 0.93266. A descent through it opens the door to testing 2013/2015 lows. Still, I would like to see another close lower on the weekly chart to confirm declines to come ahead. With that in mind, the AUD/CAD technical outlook sounds bearish.

AUD/CAD Weekly Chart

AUD/CAD

** Charts created in TradingView

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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter