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James Hyerczyk

The Australian Dollar is trading lower shortly before the close on Thursday despite renewed optimism over a U.S.-China trade deal. A sharp reversal to the upside in U.S. Treasury yields is one reason for the weakness. The other is a strong performance in the U.S. Dollar.

The Aussie started Thursday’s session on the weak side after headlines predicted trade talks had hit a snag over the rollback of tariffs. Some said a trade deal could be delayed until early next year.

The currency reversed course to the upside after a report in The Wall Street Journal said China had invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing. Later a report in the South China Morning Post said the United States could delay tariffs on Chinese imports even if a deal has not been reached by December 15.

At 20:31 GMT, the AUD/USD is trading .6785, down 0.0017 or -0.25%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6770 will signal a resumption of the downtrend. The Forex pair is in no position to change the main trend to up. However, given the prolonged move down in terms of price and time, it may be ripe for a closing price reversal bottom. This won’t change the trend to up, but it could lead to a 2 to 3 day counter-trend reversal to the upside.

The main range is .6671 to .6930. Its retracement zone at .6801 to .6770 is currently being tested. This zone is controlling the near-term direction of the AUD/USD.

On the upside, the first resistance zone is .6850 to .6869. The major resistance zone is .6877 to .6925.


Daily Technical Forecast

Based on the early price action, the direction of the AUD/USD into the close on Thursday is likely to be determined by trader reaction to the main 50% level at .6801.

Bearish Scenario

A sustained move under .6801 will indicate the presence of sellers. Crossing to the weak side of the downtrending Gann angle at .6780 will indicate the selling is getting stronger. This could trigger a further break into the Fibonacci level at .6770 and the uptrending Gann angle at .6761. This is a potential trigger point for an acceleration to the downside.

Bullish Scenario

Regaining and sustaining a move over .6801 will signal the return of buyers. This could trigger the start of a meaningful short-covering rally.

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