AUD/USD Forex Technical Analysis – Trader Reaction to Fibonacci Level at .7722 Sets the Tone

The Australian Dollar is trading lower on Friday as risk sentiment took a hit after the U.S. reported a jump in weekly jobless claims on Thursday and Victoria state’s entry into a five-day snap lockdown after a fresh coronavirus outbreak in Melbourne linked to the UK strain. However, the Aussie dollar remains on track for small weekly gains led by a recent run of upbeat domestic data.

At 11:36 GMT, the AUD/USD is trading .7725, down 0.0028 or -36%.

The Aussie fell as the lockdown, starting at midnight on Friday, in the country’s second-most populous state cast a shadow over broader economic recovery hopes.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend turned up on Thursday when buyers took out the previous main top at .7764. However, since the move took place without much fanfare and there was no follow-through rally on Friday, we suspect the change in trend was fueled by buy stops rather than new buying. The main trend will change to down on a move through .7564.

The minor trend is also up. A trade through .7713 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is .7820 to .7564. The Aussie is currently trading on the strong side of its retracement zone, putting it in a potentially bullish position.

The minor range is .7564 to .7772. If the minor trend changes to down then look for the selling to possibly extend into its retracement zone at .7668 to .7643.

The main retracement zone is .7579 to .7523. This zone stopped the selling at .7564 on February 2.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the AUD/USD is likely to be determined by trader reaction to .7722.

Bullish Scenario

A sustained move over .7722 will indicate the presence of buyers. If this creates enough upside momentum, buyers may take a run at yesterday’s minor top at .7772. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7722 will signal the presence of sellers. The first target is .7713. Taking this out will shift momentum to the downside with potential targets a series of retracement levels at .7692, .7668 and .7643.

Since the main trend is up, buyers could come in on a pullback into .7668 to .7643.

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