The direction of the AUD/USD on Friday is likely to be determined by trader reaction to the main Fibonacci level at .7252.
The Australian Dollar is edging lower on Friday as investors continued to book profits after its most recent rally took the currency to its highest level since September 16. Investors are slowly moving funds back into the safe-haven currencies due to worries about the economic damage of a trying winter in Europe and the United States as COVID-19 cases continue to escalate.
At 07:48 GMT, the AUD/USD is trading .7233, up 0.0002 or +0.02%.
“There are reasons to be optimistic about the global economic recovery, and eventual pandemic submission over the coming year, but we are not out of the woods yet,” said National Australia bank’s senior currency strategist Rodrigo Catril.
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7340 will signal a resumption of the uptrend. The Aussie isn’t in a position to change the main trend to down, but there is room for a normal 50% to 61.8% correction.
The minor trend is down. This is controlling the downside momentum. A move through .7318 will change the minor trend back to up.
The main range is .7414 to .6991. The AUD/USD is currently testing its retracement zone at .7252 to .7202. Trader reaction to this zone should determine the near-term direction of the Forex pair.
The short-term range is .6991 to .7340. Its retracement zone at .7165 to .7124 is the primary downside target. Since the trend is up, buyers are likely to come in on a test of this area.
The direction of the AUD/USD on Friday is likely to be determined by trader reaction to the main Fibonacci level at .7252.
A sustained move under .7252 will indicate the presence of sellers. The first downside target is the main 50% level at .7202. Taking out this level could trigger an acceleration into the short-term retracement zone at .7165 to .7124.
A sustained move over .7252 will signal the presence of buyers. This could trigger a quick rally into a minor pivot at .7281. Overcoming this level will mean the buying is getting stronger. This could lead to a test of the minor top at .7318, followed by the main top at .7340.
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James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.