AUD/USD Forex Technical Analysis – Trader Reaction to Pivot at .7813 Will Set Early Tone

The weaker U.S. Dollar and a strong rally in iron ore, copper and gold helped the Australian Dollar close higher on Friday. Volume may have been low due to the long holiday week-end, however, the buying was real because of the strong fundamentals.

The AUD/USD settled at .7803, up 0.0006 or +0.07%.

The main trend is up according to the daily swing chart. If the upside momentum continues we could see a test of the October 13 top at .7897. This is the trigger point for an even stronger rally with the next two tops the September 20 main top at .8102 and the September 8 main top at .8124.

The trend changes to down on a trade through .7501 so it is safe at this time. However, the AUD/USD is up 14 sessions from its last main bottom so it is in the window of time for a potentially bearish closing price reversal top.

The major range was formed by the December 23, 2016 main bottom at .7159 and the September 8 main top at .8124. Its retracement zone is .7641 to .7528. Trading on the strong side of this range is giving the AUD/USD a bullish bias.

The main range is .8124 to .7501. Its retracement zone is .7813 to .7886. This zone was tested on Friday. It is controlling the near-term direction of the market.

The short-term range is .7897 to .7501. Its 50% level or pivot is .7699. Since the main trend is up, this level should be considered support.

Based on Friday’s close at .7803, the direction of the AUD/USD on Tuesday when trading resumes after the bank holiday, will likely be determined by trader reaction to the main 50% level at .7813.

If the strong buying resumes then it looks like the key area to watch is the price cluster formed by the Fibonacci level at .7886 and the main top at .7897. Trader reaction to this zone will tell us whether the bulls are still in control or if the sellers have returned.