AUD/USD Forex Technical Analysis – Strengthens Over .7357, Weakens Under .7327

A weaker U.S. Dollar and increased demand for higher risk assets is helping to drive the Australian Dollar higher early Wednesday. End of the month position-squaring is also providing support. The catalyst may be optimism that the trade dispute between the United States and China will end sooner-than-expected now that the U.S. has agreed to a trade deal with Mexico.

At 0529 GMT, the AUD/USD is trading .7351, up 0.0004 or +0.06%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, with the formation of a secondary higher bottom at .7238, the AUD/USD may have built up enough upside momentum to challenge the main top at .7382. A trade through this level will change the main trend to up. A move through .7238 will signal a resumption of the downtrend.

The main range is .7453 to .7202. Its retracement zone is .7327 to .7357. This zone is controlling the near-term direction of the Forex pair. The AUD/USD is currently trading inside this zone.

Daily Swing Chart Technical Forecast

Based on the current price at .7351, the direction of the AUD/USD the rest of the day is likely to be determined by trader reaction to the Fibonacci level at .7357.

A sustained move over .7357 will signal the presence of buyers. This could trigger a surge into the main top at .7382. A trade through this level will change the main trend to up. If this move creates enough upside momentum then look for a breakout to the upside. The daily chart shows there is plenty of room to run with .7453 the next potential upside target.

A sustained move under .7357 will indicate the presence of sellers. This could lead to a break into the 50% level at .7327. This is a potential trigger point for an acceleration to the downside.

Basically, look for a strong upside bias to develop on a sustained move over .7357, and for a strong downside bias to develop on a sustained move under .7327.

Despite the identified breakout levels, be careful buying strength and selling weakness because of the below average volume. Breakouts work better if there is strong buying or selling power behind the moves.