AUD/USD Forex Technical Analysis – Trader Reaction to .7632 Should Set Tone for Week

James Hyerczyk
Australian Dollar
Australian Dollar

The AUD/USD closed lower last week while posting an inside move. The price action suggests investor indecision and impending volatility.

The Forex pair was helped by a better-than-expected trade balance, but gains were limited by several key events in the U.S. last week including the Fed’s monetary policy statement, the release of the House of Representatives’ tax reform plan and the nomination of Fed Governor Jerome Powell by President Trump as the new Fed Chair.

This week, the Reserve Bank of Australia will release its interest rate decision and monetary policy statement. It is widely expected to leave interest rates unchanged.


Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through .7624 will signal a resumption of the downtrend. The week begins with the Forex pair down nine weeks from its last main top. This puts it in the window of time for a potentially bullish weekly closing price reversal bottom.

The main range is .7329 to .8124. The AUD/USD is currently sitting inside its retracement zone at .7727 to .7632. Trader reaction to this zone will determine the longer-term direction of the market.

Weekly Technical Forecast

Based on last week’s close at .7649, the direction of the AUD/USD this week is likely to be determined by trader reaction to the main Fibonacci level at .7632.

A sustained move over .7632 will indicate the presence of buyers. The first upside target is the main 50% level at .7726. Overtaking this level could trigger an acceleration to the upside with the next target a downtrending angle at .7764.

A sustained move under .7632 will signal the presence of sellers. This should lead to a quick test of the low at .7624. If this level fails then look for a break into the uptrending angle at .7589.

The angle at .7589 is a potential trigger point for an acceleration to the downside with the next major support angle coming in at .7459. This is the last potential support angle before the .7329 main bottom.

Watch the price action and read the order flow at .7632 all week. Trader reaction to this level will tell us if the buyers or sellers are in control.

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