AUD/USD Forex Technical Analysis – Whip-Sawed by Crude Oil Volatility This Week

The Australian Dollar is trading lower early Friday. The currency rallied on Thursday to its highest level in over a week as traders shrugged off dire economic news in Europe and the United States.

New stimulus from the U.S. government also weighed on the U.S. Dollar a little. The U.S. House of Representatives on Thursday passed a $484 billion bill to expand federal loans to small businesses and hospitals overwhelmed by patients. President Donald Trump indicated he will sign the bill.

At 07:59 GMT, the AUD/USD is trading .6357, down 0.0012 or -0.19%.

Although oil prices have stabilized since collapsing earlier in the week, the outlook remains dim because global energy demand has evaporated due to business closures and travel restrictions aimed at slowing the pandemic. In addition, some countries are running out of space to store the crude oil that they are not using.

In other words, don’t count on crude oil to carry the Aussie higher over the longer-term.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend changed to up on Thursday when buyers took out the previous main top at .6398. The main trend will change to down on a trade through the last main bottom at .6254.

The short-term volatility has been the highlight of the week. The week started with the AUD/USD in an uptrend. The trend then changed to down then back to up. The price action indicates the currency’s high sensitivity to the volatility in the crude oil market.

A trade through .6445 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at .6254.

The main range is .6685 to .5510. Its retracement zone at .6236 to .6097 is support. This zone is also controlling the near-term direction of the AUD/USD.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD the rest of the session on Friday is likely to be determined by trader reaction to yesterday’s high at .6406.

Bullish Scenario

There wasn’t much of a follow-through to the upside on Thursday when buyers changed the main trend to up. So taking out yesterday’s high at .6406 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into this month’s high at .6445.

Bearish Scenario

The ability to take out or sustain a rally over .6406 will indicate that the buying has slowed, or the selling has increased. This could lead to a retest of .6254, followed closely by .6236.