AUD/USD Forex Technical Analysis – Daily Chart Strengthens Over .7078, Weakens Under .7016
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Based on last week’s price action and the close at .7039, the direction of the market on Monday is likely to be determined by trader reaction to last week’s low at .7016. Due to the prolonged move down in terms of price and time, the AUD/USD is inside the window of time for a potentially bullish closing price reversal bottom.
The Australian Dollar finished marginally higher on Friday after giving up most of its early session gains. The price action reflects concerns over U.S.-Chinese trade relations as the negotiations to end the trade dispute continued. Support was provided by another drop in U.S. Treasury yields which are now at a 10-month low. Gains were capped, however, by lower demand for higher-yielding currencies. Volume remained well below average as many of the major players remained on the sidelines during the Christmas and New Year holiday season.
On Friday, the AUD/USD settled at .7039, up 0.0009 or +0.12%.
AUD/USD Forex Technical Analysis
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Thursday when sellers took the Forex pair to .7016, taking out the October 20 bottom at .7020 in the process.
The main trend will change to up on a trade through .7247. A trade through .7016 will signal a resumption of the downtrend. Due to the prolonged move down in terms of price and time, the AUD/USD remains in a position to post a potentially bullish closing price reversal bottom.
The minor trend is also down. A trade through .7016 will signal a resumption of the minor downtrend. A trade through .7078 will change the minor trend to up. This will also shift momentum to the upside.
The short-term range is .7247 to .7016. Its retracement zone at .7132 to .7159. This is the nearest resistance.
The main range is .7394 to .7016. Its retracement zone at .7205 to .7250 is the next upside target.
Daily Swing Chart Technical Forecast
Based on last week’s price action and the close at .7039, the direction of the market on Monday is likely to be determined by trader reaction to last week’s low at .7016.
A sustained move over .7016 will indicate the presence of buyers. If this move can generate enough upside momentum, we could see a move into the minor top at .7078. Taking out this top will change the minor trend to up. This will also shift momentum to the upside. This could trigger an acceleration to the upside with the first target the short-term 50% level at .7132.
A sustained move under .7016 will signal that the selling pressure is getting stronger. This could generate the momentum needed to challenge the February 9, 2016 main bottom at .6973.
Closing Price Reversal Bottom
Due to the prolonged move down in terms of price and time, the AUD/USD is inside the window of time for a potentially bullish closing price reversal bottom. Taking out .7016 then closing higher for the session will form this reversal bottom. This chart pattern will not be a change in trend, but it could lead to the start of a 2 to 3 day counter-trend rally.
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