AUD/USD Forex Technical Analysis – Main Trend Up, but Momentum Trending Lower; Reaction to .7463 Sets the Tone
The Australian Dollar in inching higher early Monday as traders make another attempt to recover from last Thursday’s steep sell-off and potentially bearish closing price reversal top.
Concerns over China Evergrande debt are weighing on risk sentiment, while speculators betting on an earlier-than-expected rate hike by the Reserve Bank (RBA) are helping to prop up prices. Also weighing on prices is last week’s move by the RBA to stop a sell-off in government bonds that had been driving yields sharply higher.
At 11:02 GMT, the AUD/USD is trading .7468, down 0.0001 or -0.00%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum is trending lower following the confirmation of last Thursday’s potentially bearish closing price reversal top.
A trade through .7547 will negate the closing price reversal top and signal a resumption of the uptrend. A move through .7226 will change the main trend to down.
The minor trend is also up. A trade through .7379 will change the minor trend to down. This will confirm the shift in momentum.
The first minor range is .7379 to .7547. The AUD/USD is currently straddling its 50% level or pivot at .7463.
The second minor range is .7324 to .7547. Its 50% level at .7435 is the next target. If this level fails then look for an acceleration into the support cluster at .7379.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD early Monday is likely to be determined by trader reaction to the pivot at .7463.
A sustained move over .7463 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into .7499.
Overtaking .7499 will indicate the buying is getting stronger. This could help extend the rally into the main top at .7547.
A sustained move under .7463 will signal the presence of sellers. The first downside target is .7435.
Since the main trend is up, buyers could come in on the first test of .7435. However, if it fails then look for an acceleration to the downside with the .7379 pivot the next target.