AUD/USD Forex Technical Analysis – Trader Reaction to .6933 Sets the Tone

The Australian Dollar edged higher against the U.S. Dollar on Friday as traders paused from cashing in the latest profits from a spectacular nearly three month rally.

During the Asian trading session, the Australian Dollar and other risk-sensitive currencies gave up ground, before recovering and trading higher against the safe-haven greenback, following a rise in European and U.S. stocks.

At 12:24 GMT, the AUD/USD is trading .6875, up 0.0022 or +0.32%.

Investors had earlier decided to unwind their positions after a rapid build-up of bets on risk assets that had taken off on hopes of further re-opening of the economies of many countries.

The Aussie is probably at a transition point. Prices could rebound to new highs if the current drop in demand for risky assets is considered a corrective move. However, if the rise in COVID-19 cases in the U.S. continues to surge then investors could pare positions in risky assets and this could lead to a steep drop in the Australian Dollar.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7065 will signal a resumption of the uptrend. The main trend will change to down on a trade through .6402. This is highly unlikely but there is room for a normal 50% to 61.8% retracement.

The minor trend is also up. A trade through .6506 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is .7065 to .6800. Its 50% level at .6933 is the next upside target.

The second minor range is .6506 to .7065. Its 50% level at .6785 is potential support.

The main range is .6402 to .7065. Its retracement zone at .6733 to .6655 is the primary downside target.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6875, the direction of the AUD/USD the rest of the session on Friday is likely to be determined by trader reaction to .6933.

Bearish Scenario

A sustained move under .6933 will indicate the presence of sellers. These aggressive counter-trend sellers will try to produce a potentially bearish secondary lower top. This could lead to an eventual change in trend, but right now we’re only looking for a pullback into the series of retracement levels at .6785, .6733 and .6655.

Bullish Scenario

A sustained move over .6933 will signal the presence of buyers. If this is able to create enough upside momentum then look for a possible retest of the main top at .7065.