AUD/USD Forex Technical Analysis – Daily Reversal Bottom Strengthens Over .7175

Based on Friday’s close at .7178, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at .7175.
James Hyerczyk

The Australian Dollar was on the defensive all week until Friday when unexpected news about U.S. Federal Reserve policy spurred a short-covering rally that erased all of the early losses before turning the Aussie higher for the week. The earlier weakness was fueled by worries over U.S.-China trade relations, concerns over slowing global growth and talk of a possible rate cut by the Reserve Bank of Australia.

On Friday, the AUD/USD settled at .7178, up 0.0086 or +1.21%. For the week, the Aussie was up 0.0013 or +0.19%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside on Friday with the formation of a closing price reversal bottom. A trade through .7236 will change the main trend to up. A move through .7076 will signal a resumption of the downtrend.

The minor trend is up. The minor trend turned up on Friday when buyers took out .7167. This move also shifted momentum to the upside.

The main range is .7394 to .6774. Its retracement zone at .7079 to .7153 is controlling the near-term direction of the Forex pair. On Friday, the lower level provided support. The close on the strong side of this zone suggests follow-through buying on Monday.

The intermediate range is .6764 to .7236. Its retracement zone at .7000 to .6944 is potential support.

The short-term range is .7236 to .7076. Its retracement zone at .7156 to .7175 is currently being tested.

Combining the main and the short-term retracement zones creates a price cluster at .7153 to .7156. Trader reaction to this area should set the tone for the week.

Daily Swing Chart Technical Forecast

Based on Friday’s close at .7178, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the short-term Fibonacci level at .7175.

Bullish Scenario

A sustained move over .7175 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to take a run at a pair of minor tops at .7222 and .7226 and a pair of main tops at .7236 to .7247. The latter is the trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7175 will signal the presence of sellers. The first targets are .7156 and .7153. This is followed by .7131. Needless to say, the initial break is likely to be a labored move. If .7131 fails then look for a possible retest of .7079 to .7076.

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