AUD/USD Forex Technical Analysis – Trying to Establish Support at .7275 – .7242 Retracement Zone

The Australian Dollar is trading flat on Monday probably due to the U.S. Labor Day bank holiday. Traders showed little reaction to a pair of domestic reports and a balance of trade report from China. Stocks were lower in Asia, but closed in the U.S. so it was difficult for traders to gauge whether this was a risk-off or risk-on session.

At 09:34 GMT, the AUD/USD was trading .7282, down 0.0003 or -0.04%.

Domestically, the AIG Services Index came in at 42.5, below the previously reported 44.0. The ANZ Job Advertisements report was 1.6%. However, the previous report was revised higher to 19.1%.

In other news that could have an impact on Australia’s economy, China’s dollar-denominated exports rose 9.5% for the month of August while imports fell 2.1% in the same period, data from the country’s General Administration of Customs showed on Monday.

Economists polled by Reuters had expected exports to have climbed 7.1% in August from a year ago compared with a 7.2% rise in July, while imports were expected to climb 0.1% in August from a year ago, reversing a 1.4% decline in July.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on September 1.

A trade through .7414 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through the nearest main bottom at .7136.

The short-term range is .7136 to .7414. Its retracement zone at .7275 to .7242 is potential support and also a potential trigger point for an acceleration to the downside. This area was straddled on Friday and is providing support today.

The new minor range is .7414 to .7222. Its retracement zone at .7318 to .7341 is the next potential upside target.

The main support is the retracement zone at .7123 to .7055.

Short-Term Outlook

Traders should pay attention to a rally back to .7318 to .7341. This is because aggressive counter-trend sellers are likely to come in on a test of this area in an effort to form a potentially bearish secondary lower top.

On the downside, the key level is the short-term Fibonacci level at .7242. Although the AUD/USD broke through this level on Friday, the selling wasn’t strong enough to sustain the break. Nonetheless, traders should continue to watch this level.

If sellers take out .7242 with conviction, we could see an acceleration to the downside since the next major support doesn’t come in until .7136 to .7109.