AUD/USD Forex Technical Analysis – Strong Upside Momentum Could Drive Aussie into .7706 Over Short-Run

The Australian Dollar recovered some lost ground against the U.S. Dollar on Friday after spending much of the week under pressure, following a collapse in government bond yields. There wasn’t much on the data front to drive the Aussie higher so we have to chalk up the rally to end-of-the-quarter position-squaring. Technically, the Aussie was likely boosted by the confirmation of Thursday’s closing price reversal bottom.

On Friday, the AUD/USD settled at .7641, up 0.0059 or +0.78%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher following the confirmation of last Thursday’s closing price reversal bottom.

A trade through .7563 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through .7849.

A closing price reversal bottom does not signal a change in trend, but it could trigger the start of a 2 to 3 counter-trend rally.

The minor range is .7849 to .7563. Its 50% level at .7706 is the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD early Monday is likely to be determined by trader reaction to Friday’s high at .7642.

Bullish Scenario

A sustained move over .7642 will indicate the presence of buyers. It will also turn .7563 into a new main bottom. If this move continues to generate enough upside momentum then look for a move into the 50% level at .7706. Since the main trend is down, sellers are likely to come in on a test of this level.

Bearish Scenario

A sustained move under .7642 will signal the presence of sellers. This could trigger a quick break into a minor pivot at .7603. Aggressive counter-trend buyers could come in on the first test of this level. If it fails then look for the selling to extend into .7563.

Taking out .7563 could trigger the start of another acceleration to the downside with the next major target coming in at .7462. Another sharp break in government bond yields will likely be the catalyst driving the next plunge.