Holding .7331 Could Power AUD/USD into .7431 Main Top

The Australian Dollar touched its highest level since November 10 on Friday, helped by the global commodities boom. The Aussie was also supported by more positive economic news.

The currency is typically regarded as a risk currency, but the decline in risk appetite hasn’t hurt it at all even as the war in Ukraine shows no signs of letting up.

On Friday, the AUD/USD settled at .7374, up 0.0046 or +0.63%. The Invesco Currency Shares Australian Dollar Trust ETF (FXA) finished at $73.14, up $0.51 or +0.70%.

On the economic front, retail sales for January rebounded with a gain of 1.8%, which equaled the estimate. This followed an extremely weak reading of minus 4.4% in December. Additionally, there are signs that consumer spending and exports are strengthening.

The combination of strong economic data with the commodities boom bodes well for the Aussie Dollar over the near-term.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7381 early Monday will signal a resumption of the uptrend. A move through .7086 will change the main trend to down.

The Forex pair is up 14 days from its last swing bottom, which puts it inside the window of time for a closing price reversal top.

The main range is .7556 to .6987. The AUD/USD is currently trading on the strong side of its retracement zone at .7331 to .7261, making it support.

Short-Term Outlook

The short-term direction for the AUD/USD will be determined by trader reaction to the main Fibonacci level at .7331.

Bullish Scenario

A sustained move over .7331 will indicate the presence of buyers. Taking out .7381 will indicate the buying is getting stronger. This could trigger an acceleration into the November 9, 2021 main top at .7431, followed closely by the November 4, 2021 main top at .7471.

Bearish Scenario

A sustained move under .7331 will signal the presence of sellers. This won’t change the trend, but it could trigger a further decline into the main 50% level at .7261. Look for buyers on the first test of this level, but if it fails then look for the selling to possibly extend into .7237.