Yahoo Finance AUD/USD Forex Technical Analysis – Needs to Confirm Weekly Reversal Bottom to Sustain Counter-Trend Rally
The Australian Dollar finished higher last week, producing a potentially bullish closing price reversal bottom in the process. A trade through .7230 will confirm the chart pattern. Aggressive counter-trend buying created the momentum needed to form the pattern.
Fundamentally, the counter-trend buying was fueled by a weaker U.S. Dollar. The dollar was weakened early in the week by lower-than-expected U.S. producer and consumer inflation data and optimism that a scheduled meeting between the U.S. and China could lead to a sooner-than-expected end of the trade dispute.
However, the Aussie gave back some of its gains on Friday after a sharp rise in U.S. Treasury yields made the U.S. Dollar a more attractive investment.
For the week, the AUD/USD settled at .7155, up 0.0049 or +0.69%.
Weekly Technical Analysis
The main trend is down according to the weekly swing chart. However, last week’s closing price reversal bottom may be signaling a possible shift in momentum to the upside. A trade through .7230 will confirm the chart pattern and change momentum to up.
A trade through .7085 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The short-term range is .7484 to .7085. Its retracement zone at .7285 to .7332 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this zone.
Weekly Technical Forecast
Based on last week’s price action, the direction of the AUD/USD this week is likely to be determined by trader reaction to last week’s high at .7230.
A sustained move through .7230 will signal the presence of buyers. If this move creates enough upside momentum then look for a possible extension of the rally into the resistance cluster at .7284-.7285. Look for sellers to return on a test of this area.
The inability to overcome .7230 will indicate the presence of sellers. This could drive the AUD/USD through last week’s low at .7085. Crossing to the weak side of the downtrending Gann angle at .7084 will put the Forex pair in a bearish position.
This article was originally posted on FX Empire
