The AUD/USD is trading higher on light volume. The Forex pair rallied to .7444 early in the session before pulling back to .7413. Many of the major players are on the sidelines today ahead of Thursday’s U.S. bank holiday.
The main trend is down according to the daily swing chart. However, momentum shifted to the upside with the formation of the two-day bottom at .7311. The market is far from turning the main trend to up, but there is room to rally because of the location of the nearest retracement zone.
The main range is .7145 to .7777. The market is currently trading inside its retracement zone at .7461 to .7386.
The short-term range is .7777 to .7311. If this current short-covering rally gains traction then the move could extend into its retracement zone at .7544 to .7599.
Based on the current price at .7413 and the early price action, the direction of the AUD/USD today is likely to be determined by trader reaction to the uptrending angle at .7391.
A sustained move over .7391 will indicate the presence of buyers. If volume returns to normal, we could see an extension of the rally into the major 50% level at .7461 and the long-term uptrending angle at .7421. The latter is the trigger point for an acceleration to the upside.
A sustained move under .7391 will signal the presence of sellers. This could trigger a fast break into the major Fib level at .7386. The daily chart opens up to the downside under this level with the next two targets coming in at .7351 and .7331.
Watch the price action and read the order flow at .7391. Trader reaction to this angle will set the tone for the rest of the session.