AUD/USD Forex Technical Analysis – Holding Short-Term 50% Support at .7711 Early in Session

The Australian Dollar opened lower on Monday after posting a weak close the previous session. On Friday, the Aussie attempted to rally but once again ran into resistance at the main retracement zone. The close put it in a position to challenge the short-term support zone that has held as support for several weeks.

Trading between a pair of retracement zones for a prolonged period of time, tends to indicate investor indecision and impending volatility. It also means that investors are waiting for a major catalyst to launch the next important move.

At this time we have China’s promise to crackdown on excessive speculation in commodities, especially iron ore, capping gains, and the weaker U.S. Dollar and stable U.S. interest rates underpinning prices.

At 00:13 GMT, the AUD/USD is trading .7735, up 0.0005 or +0.06%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on May 10.

A trade through .7688 will change the main trend to down. A move through .7675 will reaffirm the downtrend. A trade through .7891 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is also up. A trade through the minor top at .7814 will indicate the buying is getting stronger after three days of sideways to lower price action.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is support.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance.

Daily Swing Chart Technical Forecast

The direction of the AUS/USD on Monday is likely to be determined by trader reaction to .7711.

Bullish Scenario

A sustained move over .7712 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible surge into the main 50% level at .7770.

Bearish Scenario

A sustained move under .7711 will signal the presence of sellers. Taking out this level will put the AUD/USD in a position to challenge the main bottom at .7688. A move through this price will change the main trend to down. This could trigger a further break into the next main bottom at .7675 and the short-term Fibonacci level at .7669.

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