AUD/USD Forex Technical Analysis – Long-Term 50% Level at .7079 Controlling Price Action

The Australian Dollar finished higher on Friday but remained inside the previous day’s range. This chart pattern tends to indicate investor indecision and impending volatility. The currency was underpinned by higher U.S. Treasury yields which dampened concerns over a U.S. recession. Increased appetite for risk also helped boost the commodity-linked currency. Weaker-than-expected U.S. inflation data may have also been supportive.

On Friday, the AUD/USD settled at .7096, up 0.0022 or +0.31%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The Forex pair wilted a little last week when dovish news drove the New Zealand Dollar sharply lower, but not enough to change the trend to down.

The main trend changes to down on a trade through .7041. This is followed by a more important main bottom at .7003. A trade through .7168 will signal a resumption of the uptrend. This is followed by another main top at .7207.

Since early in the year, the price action has been primarily controlled by a pair of retracement zones. This has helped to produce choppy, two-sided trading conditions at time.

The main range is .7394 to .6764. Its 50% to 61.8% retracement zone is .7079 to .7153. This zone is controlling the longer-term direction of the AUD/USD. On Friday, the Forex pair closed inside this zone.

The intermediate range is .6764 to .6296. Its retracement zone at .7030 to .6967 is support. This zone stopped the selling at .7003 on March 8.

The short-term range is .7296 to .7003. Its retracement zone at .7150 to .7184 is resistance. This zone stopped the rally at .7168 on March 21.

Daily Swing Chart Technical Forecast

Based on Friday’s close at .7096, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .7079.

Bullish Scenario

A sustained move over .7079 will indicate the presence of buyers. If this move is able to generate enough upside momentum, we could see a rally into the main Fibonacci level at .7153. The AUD/USD will strengthen over .7153 with the next target .7168. Taking out this level will confirm the uptrend.

Bearish Scenario

A sustained move under .7079 will signal the presence of sellers. Crossing to the weak side of this main 50% level will put the AUD/USD in a bearish position with the next target .7041. Taking out this level will change the main trend to down. The daily chart opens up to the downside under .7030 so watch for a potential acceleration into .7003 then .6967.