AUD/USD Forex Technical Analysis – Trader Reaction to .6933 Sets the Tone, but Beware of Low Holiday Volume

The Australian Dollar is trading nearly flat on Friday, capped by a resurgence of the coronavirus in the United States, but underpinned by hopes of a strong global economic recovery.

Volume and volatility are extremely low with Friday being a U.S. bank holiday, nonetheless, there is an air of caution on fears that investor sentiment could drop over the long holiday weekend, driving investors into the perceived safety of the U.S. Dollar.

At 05:45 GMT, the AUD/USD is trading .6929, up 0.0003 or +0.04%.

In economic news, a pair of reports from Australia failed to move the AUD/USD. The AIG Construction Index came in at 35.5, up from 24.9 and Retail Sales rose 16.9%, slightly better than the 16.3% estimate.

In China, the Caixin Services PMI came in at 58.4, higher than the 53.8 forecast, but below the previously reported 55.0.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6975 will signal a resumption of the uptrend. A move through .6833 will change the main trend to down.

The short-term range is .7065 to .6777. Its 50% level at .6933 is controlling the near-term direction of the AUD/USD. It is currently being tested.

The intermediate range is .6506 to .7065. Its 50% level at .6785 is potential support.

The main range is .6402 to .7065. Its retracement zone at .6733 to .6655 is the major support area.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6929, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the 50% level at .6933.

Bullish Scenario

A sustained move over .6933 will indicate the presence of buyers. It’s going to be tough today, due to the low volume, but if this move is able to generate enough upside momentum then look for a surge into a pair of main tops at .6975 and .6977.

The main top at .6977 is a potential trigger point for an acceleration to the upside with .7065 to .7082 the next major targets.

Bearish Scenario

The inability to overcome .6933 will signal the presence of sellers. This could trigger a quick break into a pivot at .6882, followed by three main bottoms at .6833, .6811 and .6777.

For a look at all of today’s economic events, check out our economic calendar.

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.