Yahoo Finance AUD/USD Forex Technical Analysis –Trend Traders Likely to Defend .7224 to .7257 Retracement Zone
The Australian Dollar closed higher on Thursday, underpinned by stronger-than-expected employment data and pushed higher by weaker-than-expected U.S. Consumer Inflation data.
The jobs data was good enough to drive up Australian Government bond yields, making the Aussie a more attractive asset, at least for one day. However, it won’t have any long-term implications unless it leads to higher wages, and consequently higher inflation.
At 0136 GMT, the AUD/USD is trading .7191, up 0.0006 or +0.08%.
The U.S. CPI data won’t alter the Fed’s plans to raise rates later this month, but when combined with yesterday’s weak Producer Inflation data, it could mean the central bank is nearing neutrality.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum shifted to the upside on Tuesday with the formation of a closing price reversal bottom.
A trade through .7085 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through .7363 will change the main trend to up.
The minor trend is also down. A trade through .7235 will change the minor trend to up. This move will reaffirm the shift in momentum.
The main range is .7363 to .7085. Its retracement zone at .7224 to .7257 is the primary upside target. Thursday’s rally stopped inside this zone at .7230.
The new short-term range is .7085 to .7230. If the late session selling carries over into Friday then its retracement zone at .7157 to .7140 will become the primary downside target. A test of this zone will be very important to the chart’s structure because aggressive counter-trend buyers may try to form a secondary higher bottom.
Daily Swing Chart Technical Forecast
Thursday’s close fell inside a pair of 50% levels at .7157 and .7224. This means the direction today is a toss-up.
If buyers return then they’re likely to make a run at .7224 and .7230. A trade through .7203 could trigger a potential acceleration into the Fibonacci level at .7257.
If sellers take control then look for a possible test of .7157 to .7140. Watch this zone for aggressive counter-trend buyers. If they fail to show up and .7140 fails as support then look for a possible retest of .7085 over the near-term.
This article was originally posted on FX Empire
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