AUD/USD Forex Technical Analysis – Last Week’s Inside Move Means Decision Time for Investors

The AUD/USD closed lower last week as investors reacted negatively to the Reserve Bank of Australia’s monetary policy minutes. The RBA minutes covered the same topics previously highlighted. The RBA also said that housing and employment merit watching, as does the Australian Dollar strength.

Technical Analysis

The daily chart has been choppy and directionless so let’s take a look at the week chart.

The main trend is down according to the weekly swing chart. However, momentum is in an uptrend. This week will mark the start of the seventh week from the .7329 bottom from the week-ending May 12. This puts the Aussie in the window of time for a potentially bearish closing price reversal top. A trade through .7749 will change the main trend to up.

The short-term range is .7749 to .7329. Its retracement zone is .7539 to .7589. A week ago, the AUD/USD closed on the strong side of this zone, but last week, buyers couldn’t even take out the previous week’s high.

The close inside the retracement zone and inside the previous week’s range suggests investor indecision and impending volatility.

The main range is .7159 to .7749. Its retracement zone at .7454 to .7384 is the primary downside target.

Forecast

Based on Friday’s close at .7568 and last week’s price action, the direction of the AUD/USD this week is going to be determined by trader reaction to the short-term retracement zone.

A sustained move over the upper or Fibonacci level at .7589 will signal the presence of buyers.

Crossing to the strong side of the price cluster at .7609 will indicate the buying is getting stronger. This could generate enough upside momentum to challenge the downtrending angle at .7679. This is the last potential resistance angle since the .7749 main top.

A sustained move under the lower or 50% level at .7539 will indicate the presence of sellers. The weekly chart is open to the downside with a support cluster at .7469 the first downside target. This is followed by the major 50% level at .7454.