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James Hyerczyk

The Australian Dollar is trading at a four-week high early Monday as investors continue to react to last week’s positive September employment change report, optimism over a U.S.-China trade deal and hawkish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe. At the end of last week, financial market traders reduced the chance of a back-to-back 0.25 percentage point interest rate cut in November to just 16 percent from almost 50 percent last week.

At 03:30 GMT, the AUD/USD is trading .6892, up 0.0006 or +0.09%.


Daily Swing Chart 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 at .6857. The next upside target is the main top at .6895. A trade through .6724 will change the main trend to down.

The main range is .7082 to .6671. Its retracement zone at .6877 to .6925 is the primary upside target. Watch for profit-taking and counter-trend selling on the first test of this area.


Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD the rest of the session on Monday is likely to be determined by trader reaction to Friday’s close at .6856.

Bullish Scenario

A sustained move over .6856 will indicate the presence of buyers. If this can generate enough upside momentum then look for the rally to extend into the main 50% level at .6877. Look for profit-taking on the first test of this level.

Overtaking .6877 will indicate the buying is getting stronger. The next target is the main top at .6895. Taking out this level will reaffirm the uptrend. This could lead to a test of the Fibonacci level at .6925.

Bearish Scenario

A sustained move under .6856 will signal the presence of sellers. If this move can create enough downside momentum then we could see a retracement of the rally from the .6724 main bottom. This would make .6795 the next likely downside target.

Side Note

The retracement zone at .6877 to .6925 is very important to the near-term structure of the AUD/USD. This zone is likely to be tested all week.

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