AUD/USD Forex Technical Analysis – Strengthens Over .7397, Weakens Under .7374

The Australian Dollar is rebounding slightly early Friday, following a steep plunge the previous session. Following a two-day recovery, the Aussie looks like it’s getting ready to resume it longer-term downtrend.

At 0439 GMT, the AUD/USD is trading .7386, up 0.0009 or +0.12%.

Given the lack of fresh domestic news, the price action is likely to continue to be largely influenced by the direction of the U.S. Dollar, U.S. Treasury yields and appetite for risky assets. Investors are also likely to continue to monitor the Chinese financial markets for cues.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, the lack of follow-through to the upside after the change in trend earlier in the week, suggests the buying has been fueled by buy stops rather than aggressive investors willing to buy strength.

A trade through .7465 will signal a resumption of the uptrend with the next target the main top at .7484. A trade through .7318 will change the main trend to down.

The minor trend is also up. A trade through .7359 will change the minor trend to down.

The main range is .7310 to .7484. Its 50% level or pivot at .7397 appears to be controlling the direction of the AUD/USD.

The short-term range is .7318 to .7465. The Forex pair is currently testing its retracement zone at .7392 to .7374.

The combination of the two retracement zones makes .7392 to .7397 the key area to watch today for direction.

Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the short-term Fibonacci level at .7374.

A sustained move over .7374 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to extend into .7392 then .7397.

Look for a potential acceleration to the upside if buyers can overcome .7397 with rising volume. The daily chart indicates there is no visible resistance until .7465, followed by .7484 and a major 50% level at .7492.

A sustained move under .7374 will signal the presence of sellers. This could trigger a move into the minor bottom at .7359. Look for a potential acceleration to the downside if this level is violated with the next potential targets .7318 and .7310.