AUD/USD Forex Technical Analysis – Shift in Momentum Could Lead to Test of .7675 to .7641

The Australian Dollar is trading slightly better against the U.S. Dollar during a low volume, low volatility session early Monday, shrugging off strong labor market data as traders expressed caution ahead of a Reserve Bank (RBA) meeting this week.

At 06:47 GMT, the AUD/USD is trading .7719, up 0.008 or +0.10%.

Data on Monday showed nationwide home prices posted another solid increase in April, while job advertisements climbed to their highest level since 2008 and up almost 200% on a year when a pandemic lockdown shut many industries.

Investors expect the RBA on Tuesday to maintain its ultra-supportive policy settings at its monthly rate-setting meeting.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower following last Thursday’s closing price reversal top and Friday’s subsequent confirmation.

A trade through .7818 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through .7691.

The minor trend is down. It changed to down on Friday when sellers took out .7725. This move was further confirmation of the shift in momentum.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance. This zone stopped the rally last week at .7818.

The short-term range is .7532 to .7818. Its retracement zone at .7675 to .7641 is the primary downside target. Buyers could return on a pullback into this area. However, if .7641 fails then look for the selling to possibly extend into an area supported by a pair of main bottoms at .7586 and .7532.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7711.

Bullish Scenario

A sustained move over .7711 will indicate the presence of buyers. If this move creates enough upside momentum then look for a rally into .7770. This is not likely on Monday due to the low volume and the bank holiday in Australia.

Bearish Scenario

A sustained move under .7711 will signal the presence of sellers. The first downside target is the main bottom at .7691, followed by the short-term retracement zone at .7675 to .7641.

Taking out .7691 will change the main trend to down, but don’t be surprised if aggressive counter-trend buyers stepped in at .7675 to .7641.

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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.