AUD/USD Forex Technical Analysis – Strong US Jobs Report Leads to Profit-Taking Reversal Top

The Australian Dollar finished lower on Friday after hitting its highest level since April 22. The potentially bearish closing price reversal top chart pattern suggests momentum may be getting ready to shift to the downside.

The catalyst triggering the move was stronger than expected U.S. jobs data, which offset the faint hopes that the Federal Reserve might slow its planned pace of interest rate hikes.

On Friday, the AUD/USD settled at .7208, down 0.0057 or -0.79%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) closed at $71.40, down $0.56 or -0.78%.

Aussie Falls as Strong US Jobs Data Revives Aggressive Tightening Hopes

Aussie bulls took profits on Friday, after a U.S. report showed non-farm payroll employment jumped by 390,000 jobs in May after surging by an upwardly revised 436,000 jobs in April. Economists had expected employment to increase by about 325,000 jobs compared to the addition of 428,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate remained unchanged at 3.6 percent. The unemployment rates was expected to edge down to 3.5 percent. The government report also showed average hourly earnings rose 0.3%, below the forecast, but matching April’s figure.

The better-than-estimated job increase indicates the economy is still strong, while the dip in average hourly wages suggests growth is starting to moderate amid a rebound in the labor force.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to trend lower. A trade through .7201 will confirm the closing price reversal top. This won’t change the main trend to down, but it will shift momentum to the downside.

A trade through .7283 will negate Friday’s closing price reversal top and signal a resumption of the uptrend. A move through .6829 will change the main trend to down.

The minor trend is also up. A trade through .7141 will change the minor trend to down. This will confirm the shift in momentum.

The main range is .7661 to .6829. Its retracement zone at .7245 to .7343 is resistance. This area stopped the rally on Friday at .7283.

The intermediate range is .7458 to .6829. The AUD/USD closed inside its retracement zone at .7143 to .7218.

The short-term range is .6829 to .7283. If the minor trend changes to down then look for the selling to continue into its retracement zone at .7056 to .7002.

Daily Swing Chart Technical Forecast

Trader reaction to .7212 is likely to determine the direction of the AUD/USD on Monday.

Bearish Scenario

A sustained move under .7212 will indicate the presence of sellers. Taking out .7201 will confirm the closing price reversal top. If this move creates enough downside momentum then look for the selling to possibly extend into the support clusters formed by a 50% level at .7143 and a minor bottom at .7141.

Taking out .7141 will change the minor trend to down. This could trigger an acceleration into .7056.

Bullish Scenario

A sustained move over .7212 will signal the presence of buyers. Overtaking .7218 will indicate the buying is getting stronger with .7245 the next target.

A trade through .7245 could lead to a retest of Friday’s high at .7283, followed by the main Fibonacci level at .7343.