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James Hyerczyk

The Australian Dollar is trading nearly flat as investors shrugged off a stronger than expected retail sales report, choosing instead to focus on risk sentiment.

Australian retail sales surged a record 16.3% in May as a wide scale easing in coronavirus lockdowns allowed entire sectors to re-open, enabling a recovery from an historic plunge in April.

At 02:54 GMT, the AUD/USD is trading .6856, up 0.0003 or +0.04%.

The stunningly strong bounce suggests consumer spending will be not nearly as week as first feared in the June quarter, offering hope the economy can recover quickly from its first recession in three decades, Reuters wrote.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the momentum is trending lower. Furthermore, the formation of a secondary lower top could be a sign that the selling pressure is increasing.

The main trend will change to down on a move through .6777, while a move through .7065 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the downside momentum.

The minor range is .6777 to .6977. Its 50% level or pivot at .6877 is new resistance.

The short-term range is .7065 to .6777. Its retracement zone at .6921 to .6955 is even stronger resistance.

The main range is .6402 to .7082. Its retracement zone at .6733 to .6655 is the primary downside target. Counter-trend buyers could show up on a retest of this zone.


Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6856, the direction of the AUD/USD the rest of the session on Friday is likely to be determined by trader reaction to the pivot at .6877.

Bearish Scenario

A sustained move under .6877 will indicate the presence of sellers. If this move creates enough downside momentum over the near-term then look for a possible break into the main bottom at .6777 and the main 50% level at .6733.

Bullish Scenario

Overcoming .6877 will signal the presence of buyers. This could create a labored rally with possible targets lined up at .6921, .6955 and .6977.

For a look at all of today’s economic events, check out our economic calendar.

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