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James Hyerczyk

The Australian Dollar is being driven higher by a weaker U.S. Dollar on Monday as optimism about the outlook for a U.S.-China trade deal lifted investors’ appetite for risk. The greenback is also being driven lower by long liquidation of previously placed hedge positions. Hedgers are lifting their positions as tensions ease between the two economic powerhouses.

At 08:12 GMT, the AUD/USD is trading .6986, up 0.0001 or +0.02%.

The AUD/USD is also being supported by solid Chinese financial data that helped drive the Aussie into its highest levels since July. Last week, China reported industrial profits rose by 5.4 percent from a year earlier in November – the fastest pace in 8 months – reversing a 9.9 percent fall in October from a year ago.


Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out Friday’s high.

A trade through .6838 will change the main trend to down. This is highly unlikely, however, a close below .6985 will produce a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

The main range is .7082 to .6671. Its retracement zone is support. It is also controlling the near-term direction of the AUD/USD.


Daily Technical Forecast

The AUD/USD is currently straddling a pair of uptrending Gann angles at .6986 to .6989. Trader reaction to this price cluster will determine the direction of the Forex pair the rest of the session on Monday.

Bullish Scenario

A sustained move over .6989 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into a long-term downtrending Gann angle at .7009.

Sellers could come in on the first test of .7009, however, it’s also the trigger point for an acceleration to the upside with the next target angle coming in at .7045, followed by the July 19 main top at .7082.

Bearish Scenario

A sustained move under .6986 will indicate the buying is getting weaker or the selling is getting stronger. The first downside target is an uptrending Gann angle at .6964. Since the trend is up, buyers could come in on the first test of this angle.

If .6964 fails to hold as support then look for the selling to possibly extend into a downtrending Gann angle at .6936.  Additional uptrending Gann angle support comes in at .6928, followed by the Fibonacci level at .6925.

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