AUD/USD Forex Technical Analysis – Trader Reaction to .6727 Sets the Tone on Friday

The Australian Dollar is trading lower on Friday as investors await the release of China’s trade numbers and ahead of the U.S. Non-Farm Payrolls report at 13:30 GMT.

The Aussie weakened earlier in the session after Reserve Bank (RBA) chief Philp Lowe signaled his board is on hold, while stating further rate cuts to an already record low interest rate risked doing more damage to the economy than the short-term benefit it would create.

At 06:26 GMT, the AUD/USD is trading .6718, down 0.0013 or -0.20%.

“At the moment, the risks have slightly tilted to outweigh the benefits,” the governor told a parliamentary panel in Canberra Friday. “But, that could turn, particularly if the unemployment rate deteriorates.”

Lowe also warned of “significant areas of uncertainty” such as the outbreak of coronavirus in China – Australia’s key trading partner – and said signs of weaker hiring and inflation would swing the balance back toward rate cuts.

Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of the closing price reversal bottom on February 4 at .6679.

A trade through .6679 will signal a resumption of the downtrend. The main trend will change to up on a move through .6934.

The minor trend is also down. Taking out .6774 will change the minor trend to up. This will also confirm the upward momentum.

The minor range is .6679 to .6774. Its 50% level or pivot comes in at .6727.

The short-term range is .6934 to .6679. Its retracement zone at .6807 to .6837 is a potential upside target and resistance area.

Daily Technical Forecast

Based on the early price action and the current price at .6718, the direction of the AUD/USD the rest of the session on Friday is likely to be determined by trader reaction to the price cluster at .6727.

Bearish Scenario

A sustained move under .6727 will indicate the presence of sellers. If this is able to generate enough downside momentum then look for a possible retest of this week’s low at .6679. This is followed by the October 2, 2019 main bottom at .6671. This is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over .6727 will signal the presence of buyers. This could trigger a rally into the downtrending Gann angle at .6762.