AUD/USD Forex Technical Analysis – Buyers Struggling Inside .7143 – .7218 Retracement Zone

The Australian Dollar is edging lower on Tuesday after the country’s current account surplus shrank unexpectedly in the first quarter as companies paid out fatter dividends to offshore investors, while import volumes far outstripped exports taking a chunk out of economic growth.

At 08:46 GMT, the AUD/USD is trading .7191, down 0.0008 or -0.10%. Last Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $70.89, up $0.64 or +0.91%.

Data from the Australian Bureau of Statistics released earlier in the session showed the current account surplus narrowed to A$7.5 billion ($5.38 billion), well short of forecasts of a A$13.4 billion.

In other news, Australian building approvals fell 2.4% in seasonally adjusted terms in April, following a 19.2% drop in March, the Australian Bureau of Statistics said Tuesday.

Later in the session, investors will get the opportunity to react to several minor U.S. reports including data on housing, Chicago PMI and the Conference Board’s Consumer Confidence.

All of this leads up to Wednesday’s major Australian GDP report. It is expected to come in at 0.6%, down from the previously reported 3.4%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through .7266 will change the main trend to up.

Taking out .6829 will signal a resumption of the downtrend. This is highly unlikely, but due to the prolonged move up in terms of price and time, the AUD/USD is ripe for a potentially bearish closing price reversal top.

The minor trend is also up. A trade through .7035 will change the minor trend to down. This will shift momentum to the downside.

The main range is .7661 to .6829. Its retracement zone at .7245 to .7343 is a potential upside target and resistance area.

The intermediate range is .7458 to .6829. The AUD/USD is currently testing its retracement zone at .7143 to .7218.

The short-term range is .6829 to .7204. Its retracement zone at .7016 to .6972 is the nearest downside target area.

Daily Swing Chart Technical Forecast

Trader reaction to .7199 is likely to determine the direction of the AUD/USD on Tuesday.

Bullish Scenario

A sustained move over .7199 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into .7218 to .7245. Sellers could come in on the first test of this area. Overtaking this zone could trigger a surge into the main top at .7266. Taking out this level will change the main trend to up.

Bearish Scenario

A sustained move under .7199 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into .7143. This is a potential trigger point for an acceleration to the downside with .7016 the next potential target.

Side Notes

A close under .7199 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction with .7016 the minimum downside target.