AUD/USD Buyers Defending .7140 – .7181 Retracement Zone

The Australian Dollar is trading sharply lower against the U.S. Dollar early in the session on Monday, after Western nations announced a harsh set of sanctions to punish Russia for its invasion of Ukraine, including blocking some banks from the SWIFT international payments systems.

At 00:27 GMT, the AUD/USD is trading .7180, down 0.0053 or -0.73%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $71.10, down $0.07 or -0.09%.

The risk-sensitive Aussie Dollar tumbled as Russian President Vladimir Putin ordered his military command to put nuclear-armed forces on high alert on Sunday, the fourth day of the biggest assault on a European state since World War Two.

The early price action suggests professionals are trading by “The Book”, which means sell risk, buy safety, until they can assess the new developments.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7086 will change the main trend to down. A move through .7284 will signal a resumption of the uptrend.

The minor trend is also up. A trade through .7095 will change the minor trend to down. This will shift momentum lower.

The short-term range is .7314 to .6967. The AUD/USD is currently straddling its retracement zone at .7140 to .7181.

The minor range is .6967 to .7284. Its retracement zone at .7125 to .7088 is support. It stopped the selling at .7095 on February 24.

The main range is .7556 to .6967. Its retracement zone at .7262 to .7331 is resistance. It stopped the buying at .7284 on February 23.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7181.

Bullish Scenario

A sustained move over .7181 will indicate the presence of buyers. If this move creates enough upside momentum then look for a near-term surge into the main 50% level at .7262, followed by the minor top at .7284.

Taking out .7284 could extend the rally into the main Fibonacci level at .7331.

Bearish Scenario

A sustained move under .7181 will signal the presence of sellers. This could lead to a labored break into a series of retracement levels at .7140, .7125 and .7125.

The selling pressure starts to increase under .7125 with the next targets clustered at .7095 to .7086. Taking out .7086 will change the main trend to down. This could lead to a test of the next main bottom at .7052.

The main bottom at .7052 is a potential trigger point for an acceleration into another support cluster at .6967 – .6963.