AUD/USD Forex Technical Analysis – January 4, 2019 Forecast

The Australian Dollar is recovering for a second session early Friday after tumbling to its lowest level since the GFC the previous day. Thursday’s trading range was also the largest since the UK Brexit referendum in June 2016.

Helping to underpin the Aussie was weaker-than-expected U.S. economic data and dovish remarks from a high-ranking U.S. Federal Reserve official. Falling U.S. Treasury yields also made the U.S. Dollar a less-desirable investment while increasing demand for the Australian Dollar.

Later today at 1330 GMT, investors will get the opportunity to react to the latest U.S. Non-Farm Payrolls report for December.

At 0813 GMT, the AUD/USD is trading .7029, up 0.0022 or +0.33%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher with the formation of a potentially bullish closing price reversal bottom on Thursday and the subsequent confirmation earlier today.

The minor trend is also down. A trade through .7078 will change the minor trend to up. This will reaffirm the shift in momentum to up.

The short-term range is .7247 to .6764. The market is currently testing its retracement zone at .7006 to .7063.

The main range is .7394 to .6764. The next target area is its retracement zone at .7079 to .7153.

The combination of the two retracement zones creates a resistance cluster at .7063 to .7079.

There is also the possibility of a 50% retracement of the first rally from .6764, however, this is highly unlikely since the break to that level was caused by the rare “flash crash”.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the short-term 50% level at .7006.

Bullish Scenario

A sustained move over .7006 will signal the presence of buyers. This could lead to a surge into the resistance cluster at .7063, .7078 and .7079. Since the main trend is down, look for sellers on the first test of this area.

Watch for an acceleration to the upside if buyers can take out .7079 with strong volume. This could trigger a move into the Fibonacci level at .7153.

Bearish Scenario

A sustained move under .7006 will signal the presence of sellers. In the worst case scenario, we could see a 50% correction into around .6898.