AUD/USD Forex Technical Analysis – Last Major Support Cluster Before Steep Break at .7164 to .7145

Australian Dollar traders face a slew of economic reports this week as well as the Reserve Bank of Australia’s monetary policy decision. Investors will also get the opportunity to react to U.S. economic data and the threat of an escalation of the rade dispute between the United States and China.

Fundamentally, the divergence between the monetary policies of the hawkish U.S. Federal Reserve and the dovish Reserve Bank of Australia continues to be the main driver of the bearish price action.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through .7484 will change the main trend to up.

The key support is a pair of main bottoms at .7159 and .7145. Crossing to the weak side of these bottoms could trigger the start of a prolonged downtrend with the February 9, 2016 main bottom at .6973 the primary downside target.

The minor trend is also down. A trade through .7382 will change the minor trend to up. This will also shift weekly momentum to the upside.

Weekly Technical Forecast

The key are at watch this week is a potential support cluster formed by a pair of downtrending Gann angles at .7164 and .7157 as well as the December 23, 2016 main bottom at .7159 and the May 24, 2016 main bottom at .7145. Basically, the potential support zone is .7164 to .7145.

Monday’s low at .7166 was slightly above the support cluster, indicating that aggressive counter-trend traders are willing to come in to defend this area.

Based on the price action on Monday, we could see a counter-trend rally this week if buyers can sustain a move over .7164. Closing above last week’s close at .7193 will indicate the short-covering is getting stronger. This could lead to a potentially bullish weekly closing price reversal bottom.

If the upside momentum is strong enough then we could see a test of the downtrending Gann angle at .7324. This angle has guided the AUD/USD lower for 8 weeks or since the .7484 main top the week-ending July 13.

Crossing to the weak side of the angle at .7164 will signal the presence of sellers. Taking out .7159, .7157 and .7145 will indicate the selling pressure is getting stronger. This could trigger the start of a steep sell-off with the eventual target the February 9, 2016 main bottom at .6973.