AUD/USD Forex Technical Analysis – Short-Covering Rally Likely to Strengthen Over .6723

The Australian Dollar is trading higher early Thursday as short-sellers continue to adjust positions due to the increasing chances of a rate cut by the U.S. Federal Reserve at its October 29-30 monetary policy meeting. The Aussie picked up strength during Wednesday’s session amid signs of a slowdown in U.S. economic growth and a deepening of global trade tensions.

At 04:24 GMT, the AUD/USD is trading .6716, up 0.0009 or +0.13%.

The greenback fell against the Aussie during yesterday’s session after data showed hiring by U.S. private employers had slowed in September, the latest indication that the U.S.-China trade dispute is damaging the world’s largest economy.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, Wednesday’s closing price reversal bottom suggests momentum may be shifting to the upside.

A trade through .6719 will confirm the closing price reversal bottom. This will also shift momentum to the upside and could trigger a minimum 2 to 3 day counter-trend rally.

A move through .6671 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor range is .6775 to .6671. Taking out its 50% level or pivot at .6723 will also signal a shift in momentum to the upside.

The short-term range is .6895 to .6671. If there is a near-term breakout to the upside then its retracement zone at .6783 to .6809 will become the primary upside target.

Daily Technical Forecast

Based on the early price action and the current price at .6716, the direction of the AUD/USD is likely to be determined by trader reaction to the pivot at .6723.

Bearish Scenario

A sustained move under .6723 will indicate the presence of sellers. This could lead to quick break to .6696 or a full retest of this week’s low at .6671.

Bullish Scenario

Taking out and sustaining a rally over .6723 will signal the presence of buyers. This could trigger a surge into the downtrending Gann angle at .6745. Since the main trend is down, sellers could come in on the first test of this angle.

Taking out the angle at .6745 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with the next major target the short-term 50% level at .6783.