AUD/USD Forex Technical Analysis – Short-Term Downside Target Zone .7194 to .7169

The Australian Dollar finished lower on Monday with the selling driven by renewed concerns over an escalation of the trade dispute between the United States and China. Position-squaring ahead of the widely expected U.S. Federal Reserve interest rate hike on Wednesday also contributed to the downside pressure. As far as the Fed is concerned, investors may be more interested in what the central bank has to say about the pace of future rate hikes.

The AUD/USD settled at .7251, down 0.0037 or -0.51%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of the closing price reversal top on Friday and the subsequent confirmation on Monday. A trade through .7304 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is also up. Yesterday’s price action turned .7304 into a new minor top.

Both the minor and main trends turn to down on a trade through .7142.

The main range is .7363 to .7085. Its retracement zone is .7224 to .7257. This zone is currently being tested. It is controlling the near-term direction of the AUD/USD.

The short-term range is .7085 to .7304. Its retracement zone at .7194 to .7169 is the next downside target.

Daily Swing Chart Technical Forecast

Based on yesterday’s price action and the close at .7251, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the Fibonacci level at .7257.

A sustained move under .7257 will signal the presence of sellers. If the selling pressure increases then look for a move into the 50% level at .7224. We could see a technical bounce on the first test of this level.

If .7224 fails as support then look for a potential acceleration to the downside with the next target zone .7194 to .7169. Since the main trend is up, buyers are likely to show up on the initial test of this zone.

A sustained move over .7257 will signal the presence of buyers. This could lead to an intraday short-covering rally. The uptrend resumes on a move through .7304.