AUD/USD Forex Technical Analysis – Getting Ready to Challenge Key Retracement Zone at .7123 to .7055

The Australian Dollar is trading lower on Thursday after the country’s central bank stoked speculation of a near-term cut in interest rates while hinting it may buy more longer-dated government debt.

The big move was in Aussie government bonds where 10-year futures jumped 8 ticks to 99.2400, their highest since early April and a clear break of major resistance at 99.1800.

At 06:00 GMT, the AUD/USD is trading .7127, down 0.0035 or -0.49%.

The bond rally came after Reserve Bank of Australia (RBA) Governor Philip Lowe noted that 10-year yields were among the highest in the developed world and it was worth considering whether buying the debt in the market would bring those down.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7096 will change the main trend to down. A move through .7243 will signal a resumption of the uptrend.

On the upside, the resistance is the retracement zone at .7210 to .7258.

On the downside, the support is the retracement zone at .7123 to .7055. This zone is also controlling the longer-term direction of the AUD/USD.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the main 50% level at .7123.

Bullish Scenario

A sustained move over .7123 will indicate the presence of buyers. This will be a sign that investors are defending the uptrend by protecting the main bottom at .7096. If this move creates enough upside momentum then look for a potential surge into the short-term 50% level at .7210 over the near-term.

Bearish Scenario

A sustained move under .7123 will signal the presence of sellers. This could lead to a test of the main bottom at .7096. Taking it out will change the main trend to down and possibly extend the selling into the main Fibonacci level at .7055.

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Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.