AUD/USD Forex Technical Analysis – May 22, 2017 Forecast

The AUD/USD opened lower Monday with the market trading inside Friday’s range. This suggests investor indecision and impending volatility. Without any key reports in Australia or the U.S. for several days, investors are reading the news hoping for a volatility-producing headline.

Technical Analysis

The main trend is down according to the daily swing chart. The main trend will turn up on a trade through .7556. A move through .7329 will signal a resumption of the downtrend.

The AUD/USD is up nine trading sessions since the May 9 bottom at .7329, but it is still having trouble with the main retracement zone so I can’t say that momentum is trending higher at this time. So far it’s just a nine day counter-trend rally.

The main range is .7558 to .7329. Its retracement zone is .7442 to .7469. Inside this zone is a major 50% level at .7454. The AUD/USD has been straddling this zone the last three days. Trader reaction to this zone will tell us whether the buying is getting stronger or if the sellers are setting up a secondary lower top.

Forecast

Based on Friday’s close at .7454, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the major 50% level at the same price.

A sustained move over .7454 will indicate the presence of buyers. This could trigger a rally into the short-term Fibonacci level at .7469. Taking out this level could trigger a further rally into the downtrending angle at .7486.

The downtrending angle at .7486 is likely to act like resistance on the first test, but it is also the trigger point for an acceleration into the next pair of angles at .7509 and .7521.

A sustained move under .7454 will signal the presence of sellers. The first downside target is the main 50% level at .7442. Taking out .7442 could trigger a further break into the uptrending angle at .7419.

The angle at .7419 has been guiding the AUD/USD higher since May 9. Buyers may come in on a test of this angle since it has held for nine sessions. If it fails to hold then look for a possible steep plunge into the major Fib level at .7384.

Watch the price action and read the order flow at .7454 all session on Monday. This will tell us if the buying is getting stronger or if sellers are retaking control.