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James Hyerczyk

The Australian Dollar rose on Friday as investors tried to resume the uptrend that has been interrupted by two days of lower-to-sideways trading. The inside move suggests investor indecision and impending volatility.

Most of the strength on Friday was driven by a weaker U.S. Dollar. The dollar continued to lose its appeal as a safe-haven asset in the wake of optimism over improving U.S. economic data and positive coronavirus vaccine test results. Increased demand for risky assets and lower U.S. Treasury yields were also supportive for the Aussie.

On Friday, the AUD/USD settled at .6996, up 0.0024 or +0.34%.

Gains may have been limited by concerns that rising COVID-19 in Australia would lead to more restrictions and lockdowns that could derail the country’s economic recovery.


Daily Swing Chart Technical Analysis


Main Trend Analysis

The main trend is up according to the daily swing chart. A trade through .7038 will signal a resumption of the uptrend. If this creates enough upside momentum then look for the rally to possibly extend into the June 10 main top at .7065, followed by the July 19, 2019 main top at .7082.

The main trend will change to down on a trade through the last main bottom at .6833. If this move continues to generate enough downside momentum then look for possible tests of the next two main bottoms at .6811 and .6777.

Minor Trend Analysis

The minor trend is also up after a couple of weeks of choppy trading. The new minor top is .7038. Taking it out will signal a resumption of the uptrend. A trade through .6921 will change the minor trend to down. This will also shift momentum to the downside.

Retracement Levels

The minor range is .6921 to .7038. Its 50% level or pivot at .6979 has been controlling the price action the last three days.

The short-term range is .7065 to .6777. Its 50% level at .6921 is support. This level has been holding up the AUD/USD since July 7.

Short-Term Outlook

Since the main trend is up, we’re going to focus on the exits over the short-run.

The first sign of weakness will be a sustained move under .6979. This won’t change the main trend to down, but it will indicate the selling is greater than the buying at current price levels.

The next key level is .6921. This is a support cluster formed by a minor bottom and a 50% level. If it fails then we could see an acceleration into .6833.

This uptrend is all about sustaining the momentum. Taking out .7038 should extend the rally into at least .7065 to .7082.

For a look at all of today’s economic events, check out our economic calendar.
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