AUD/USD Forex Technical Analysis – Confirmation of Closing Price Reversal Bottom Shifted Momentum to Up

The Australian Dollar is trading higher on Monday, bolstered by better than expected economic data from China, lower U.S. Treasury yields and a weaker U.S. Dollar. A confirmation of Friday’s potentially bullish closing price reversal bottom chart pattern is also contributing to the early strength.

At 09:17 GMT, the AUD/USD is at .7356, up 0.0025 or +0.34%.

Ahead of today’s opening traders were concerned about a slowdown in China, Australia’s biggest export market. However, these worries may have been dampened by better than expected Chinese retail sales and industrial output data.

According to the reports, China’s industrial output and retail sales in October handily beat forecasts, growing 3.5% and 4.9% respectively from the same period a year ago.

Meanwhile, the U.S. Dollar dipped in response to weaker consumer sentiment due to high inflation worries.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside earlier today when buyers confirmed Friday’s closing price reversal bottom.

A trade through .7431 will change the main trend to up, while a move through .7277 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is .7170 to .7556. The AUD/USD is currently trading inside its retracement zone at .7363 to .7317. This zone is controlling the near-term direction of the Forex pair.

The short-term range is .7556 to .7277. Its 50% level at .7417 is the next upside target and the last potential resistance before the .7431 main top.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD the rest of the session on Monday is likely to be determined by trader reaction to .7363.

Bullish Scenario

A sustained move over .7363 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the pivot at .7417.

Since the main trend is down, sellers are likely to come in on a test of .7417. Overtaking it, however, could create the upside momentum needed to take out the main top at .7431. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7463 will signal the return of sellers. This could lead to a retest of .7317. If this level fails then look for the selling to possibly extend into .7277.

Taking out .7277 will signal a resumption of the downtrend and could trigger an acceleration into .7226, followed by .7170.