AUD/USD Forex Technical Analysis – Major Weekly Downside Target at .7000 to .6944

The Australian Dollar settled lower last week while posting an inside move. The chart pattern suggests investor indecision and impending volatility. Helping to underpin the Aussie was the news that the United States and China may have offered concessions at the mid-level talks in Beijing earlier in the month. This raised hopes about a potential trade deal. Helping to put a lid on the rally and pressure the Aussie were rising U.S. Treasury yields and domestic economic concerns.

For the week, the AUD/USD settled at .7165, down 0.0051 or -0.70%.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at .6764, the week-ending January 4.

A trade through .7394 will change the main trend to up. A move through .6764 will signal a resumption of the downtrend.

The main range is .7677 to .6764. Its retracement zone at .7221 to .7328 is the primary upside target. Since the main trend is down, sellers are likely to defend that zone. The retracement zone is also controlling the near-term direction of the Forex pair. Continue to treat it like resistance.

If .6764 to .7236 becomes a short-term range then its retracement zone at .7000 to .6944 will become the primary downside target.

Weekly Technical Forecast

Based on last week’s price action and the close at .7165, the direction of the AUD/USD this week will be determined by trader reaction to the 50% level at .7221.

Bullish Scenario

Overtaking and sustaining a rally over .7221 will indicate the presence of buyers. The first target is last week’s high at .7236, followed closely by a downtrending Gann angle at .7254. Sellers could come in on the first test of this angle. Taking it out however, could drive the Aussie into a resistance cluster at .7324 to .7328. The latter is the trigger point for an acceleration to the upside with .7394 the next major target.

Bearish Scenario

A sustained move under .7221 will signal the presence of sellers. The first target is a downtrending Gann angle at .7114. Crossing to the weak side of this angle will put the AUD/USD in a bearish position. This could trigger a spike into an uptrending Gann angle at .7004, followed by a short-term 50% level at .7000 and a short-term Fibonacci level at .6944.