AUD/USD Forex Technical Analysis – Testing Key Retracement Zone at .7284 to .7332

The Australian Dollar, a proxy of China-related trades as well as gauge of risk sentiment, hit a three week high on Friday before turning lower. The Aussie was also supported by the news that S&P Global Rating revised its outlook on triple-A rated Australian bonds to stable from negative.

The Aussie retreated late in the session on Friday as the greenback firmed on persistent concerns about an escalating trade dispute between the United States and China.

The AUD/USD finished the session at .7288, down 0.0002 or -0.03%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may have shifted to the downside with the formation of a minor closing price reversal top. Although the AUD/USD posted a higher-high, lower-close and a close below the opening. It did not close below the mid-point of the trading session. This indicates that the selling may not have been that strong.

A trade through .7304 will signal a resumption of the uptrend. A move through .7262 will confirm the reversal top. This could trigger a 2 to 3 day correction and/or a 50% to 61.8% retracement of the short-term swing.

The main range is the .7484 top from July 9 and the .7085 bottom from September 11. Its retracement zone at .7284 to .7332 is currently being tested. This zone is essentially controlling the near-term direction of the market.

The short-term range is .7142 to .7304. Its retracement zone at .7223 to .7204 is the first downside target.

Daily Swing Chart Technical Forecast

Based on Friday’s close at .7288 and the late session weakness, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .7284.

A sustained move over .7284 will indicate the presence of buyers. If this generates enough upside momentum then look for buyers to take out .7304. This could trigger a surge into the main Fibonacci level at .7332. This is another trigger point for an acceleration into a pair of main tops at .7363 and .7382.

A sustained move under .7284 will signal the presence of sellers. Taking out .7262 will confirm the reversal top. This could trigger an acceleration to the downside with the retracement zone at .7223 to .7204 the next target. Since the main trend is up, buyers could come in on a test of this area.