The Australian Dollar continued to flirt with the psychological 80 cents area on Friday. The currency zigged up to .8038 but zagged back below .8000 into the close. A two-sided trade by the U.S. Dollar and profit-taking ahead of the week-end may have contributed to the session’s weakness.
The AUD/USD settled at .7982, down 0.0015 or -0.19%.
Daily Swing Chart Analysis
The main trend is up according to the daily swing chart. However, the daily closing price reversal top may have stopped the upside momentum. This does not signal a change in trend, but it may be indicating that the selling is greater than the buying at current price levels.
A trade through .7978 will confirm the chart pattern. This could trigger the start of a 2 to 3 day correction, or a 50% correction of the current rally from .7807 to .8038.
A trade through .8038 will negate the closing price reversal top and signal a resumption of the uptrend. The first target is the September 20th main top at .8102, followed by the September 8th main top at .8124.
Trader reaction to Friday’s low at .7978 will likely determine the direction of the AUD/USD early next week. If this level is taken out then look for a quick move into the 50% level at .7922.
If .7922 fails then the selling pressure may extend into the major long-term Fibonacci level at .7886.
The inability to confirm the closing price reversal top on the move through .7978 will signal the presence of buyers.
Essentially, if trend traders continue to buy strength then look for the rally to resume on a move through .8083 with .8102 the first target.
If sellers take control then look for the weakness to extend into .7922. If the selling pressure is strong enough then look for a possible move into .7886.