AUD/USD Forex Technical Analysis – Testing Short-Term Retracement Zone at .7210 – .7258

The Australian Dollar is trading lower on Monday after failing to follow-through to the upside following Friday’s impressive rally. The Aussie was also pressured as the dollar rose amid concerns over fiscal stimulus in the United States.

A lower Yuan also helped cap gains and fuel some selling. The Aussie and Yuan are correlated because China is Australia’s biggest trading partner. The Yuan fell after the People’s Bank of China (PBOC) changed its policy on Yuan reserves.

At 09:58 GMT, the AUD/USD is trading .7212, down 0.0030 or -0.41%.

Traders could also be squaring positions ahead of Thursday’s Australian employment data and an expected rate cut by the Reserve Bank in November.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday. A move through .7243 will signal a resumption of the uptrend, while a trade through .7096 changes the main trend to down.

The short-term range is .7414 to .7006. Its retracement zone at .7210 to .7258 is resistance. This zone is currently being tested and could determine the near-term direction of the AUD/USD.

The minor range is .7096 to .7243. Its 50% level at .7169 is a potential downside target.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the short-term 50% level at .7210.

Bullish Scenario

A sustained move over .7210 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible rally into Friday’s high at .7243, followed closely by the short-term Fibonacci level at .7258. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7210 will signal the presence of sellers. If this move generates enough downside momentum then look for a possible break into the minor 50% level at .7169.