AUD/USD Price Forecast: Aussie Dollar Pushing Toward Key Resistance

AUD/USD has extended above the February swing high at 0.7805 and now seeks out the 2021 January high at 0.7820. The 0.7820 level could be a level of exhaustion for the pair with profit taking possible around this resistance zone.

The Relative Strength Index (RSI) suggests that the bullish momentum is slowing (blue), as similar price levels in January printed far higher RSI values. This is known as divergence, but more specifically bearish divergence in this case. That is, price rejection at the resistance zone could lead to a possible trend reversal toward the 0.7724 swing low which will be succeeded by the 0.7564 support zone if breached.

From the bullish perspective, a confirmation candle close above the 0.7820 will bring into focus the 0.7927 resistance target ( 50% Fibonacci retracement level).

Key technical points to consider:

  • Key levels – 0.7820 resistance
  • Technical indicators - RSI divergence
  • Economic announcements next week
  • IGCS data

IG CLIENT SENTIMENT DATA SUGGESTIVE OF FURTHER UPSIDE

AUD/UD BULLISH Data provided by IG

CHANGE IN LONGS SHORTS OI
DAILY -29% 15% -3%
WEEKLY -21% 11% -1%

IGCS shows retail traders are net short on AUD/USD, with 65% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment, and the fact traders are net-short is suggestive of a bullish bias.

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