AUD/USD Forex Technical Analysis – Retracement Zone at .7786 – .7733 Controlling Near-Term Direction

The Australian Dollar retreated on Friday as the U.S. Dollar recovered its losses from the previous session, riding a spike higher in U.S. Treasury yields. The Aussie was able to recover from early session weakness after U.S. stocks climbed, and the dollar and yields fell from their intraday highs. The Aussie Dollar is a proxy for risk appetite so it tends to be underpinned by strong performances in the stock market.

On Friday, the AUD/USD settled at .7757, down 0.0029 or -0.37%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of a closing price reversal bottom on March 9.

A trade through .7621 will signal a resumption of the downtrend. The main trend will change to up on a trade through .8007.

The main range is .7564 to .8007. The AUD/USD is currently trading inside its retracement zone at .7786 to .7733. This zone is controlling the near-term direction of the Forex pair.

The short-term range is .8007 to .7621. Its retracement zone at .7814 to .7860 is potential resistance.

The minor range is .7621 to .7800. Its retracement zone at .7710 to .7689 is potential support.

Short-Term Outlook

Broadly speaking, the direction of the AUD/USD early in the session on Monday will be determined by trader reaction to the main 50% level at .7786 and the 61.8% level at .7733.

Bullish Scenario

A sustained move over .7786 will indicate the presence of buyers. This could trigger a surge into the short-term retracement zone at .7814 to .7860. Since the trend is down, look for sellers on the first test of this area.

This zone is important to the structure of the chart pattern. Trend trading sellers are going to try to stop the rally, while aggressive counter-trend buyers are going to try to take out .7860 in an effort to trigger an acceleration to the upside. Sellers are going to try to form a secondary lower top.

Bearish Scenario

A sustained move under .7733 will signal the presence of sellers. The first downside target is the minor range at .7710 to .7689.

Aggressive counter-trend buyers are likely to come in on a test of the zone. They are going to try to form a secondary higher bottom. Sellers are going to try to trigger an acceleration to the downside on a trade through .7689. Their objective will be .7621.