AUD/USD Forex Technical Analysis – ‘Risk-On’ Rally Being Capped by Low Holiday Volume

The Australian Dollar is up in holiday-thinned trading on Monday, but moving inside the previous session’s range. The price action suggests investor indecision and impending volatility, but it is also typical of a bank holiday market.

The Aussie is being underpinned by demand for higher-yielding assets as investors continued to bet that U.S. fiscal stimulus and coronavirus vaccinations will quicken the global economic recovery.

At 08:03 GMT, the AUD/USD is trading .7617, up 0.0018 or +0.23%.

There were no economic reports out of Australia on Monday. The catalyst underpinning the Aussie was increased demand for risk which drove up the global equity markets while pressuring the U.S. Dollar.

U.S. President Donald Trump triggered the surge on Sunday when he signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a federal government shutdown in a crisis of his own making.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7640 will signal a resumption of the uptrend. The main trend will change to down on a move through .7339.

The minor trend is down. A trade through .7462 will indicate the selling pressure is getting stronger.

The minor range is .7640 to .7462. Its 50% level at .7551 is support.

The short-term range is .7339 to .7640. Its 50% level at .7489 is additional support.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7551.

Bullish Scenario

A sustained move over .7551 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into .7640. Overcoming this level could trigger a further move into the June 6, 2018 main top at .7677.

Bearish Scenario

A sustained move under .7551 will signal the presence of sellers. This could trigger a sharp break into the next 50% level at .7489.

Side Notes

Be careful chasing the market in either direction because of the low volume. It’s easy to get trapped in a whipsaw market on a fake breakout fueled by weak volume.