AUD/USD Forex Technical Analysis – Another Whipsaw Day? Strenghtens Over .7275, Weakens Under .7212

The Australian Dollar is inching higher early Thursday after posting a wicked outside move the previous session. The price action was fueled by a combination of extremely thin holiday volume, mixed demand for riskier assets and speculation the government is considering relaxing isolation rules to keep people working and the economy functioning.

At 05:21 GMT, the AUD/USD is trading .7255, up 0.0006 or +0.09%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $71.95, up $0.22 or +0.31%.

Mixed fundamentals were likely the catalysts behind the volatile price action. At times we saw “risk-on” and “risk-off” scenarios. We also saw the U.S. Dollar plunge against a basket of major currencies. However, after the dust cleared, we saw it remained supported by a sharp rise in U.S. 10-year Treasury notes. Some investors even blamed end-of-the-month/year position-squaring for the choppy trade.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7272 will signal a resumption of the uptrend. A move through .7083 will change the main trend to down.

The minor trend is also up. A trade through .7213 will change the minor trend to down. This will also shift the momentum to the downside.

The main range is .7556 to .6993. Its retracement zone at .7275 to .7341 is the primary upside target area. Aggressive counter-trend traders could come in on a test of this area. This zone is also controlling the near-term direction of the AUD/USD.

On the downside, support is lined up at .7212 and .7182. If .7182 fails then look for a potential plunge into .7132.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7243.

Bullish Scenario

A sustained move over .7243 will indicate the presence of buyers. If this move creates into upside momentum then look for the rally to possibly extend into .7272 – .7275.

Overtaking .7275 will be a sign of strength. If the buying volume is strong enough then look for an acceleration into .7341.

Bearish Scenario

A sustained move under .7242 will signal the presence of sellers. This could trigger a break into a support cluster at .7213 – .7212. If .7212 fails as support then look for the selling to possibly extend into .7182.

Side Notes

Beware of the whipsaw when buying strength and selling weakness. Make sure you have relatively strong volume on your side.