After a strong surge early last week, the Australian Dollar closed lower two consecutive days, taking some of the shine off the rally as it closed below the mid-point of the week. The price action reaffirmed the fact that despite making a bottom five weeks ago, all we’re witnessing is a rally in a bear market.
Weekly Swing Chart Technical Analysis
The main trend is down according to the weekly swing chart. However, momentum is trending higher. A trade through .7812 will change the main trend to up. A move through .7412 will signal a resumption of the downtrend.
The minor trend is up. This is why we can say the momentum is trending higher. A move through .7677 will indicate the counter-trend buying is getting stronger. The minor trend will change to down on a trade through .7476. This will shift momentum back to the downside.
The AUD/USD is currently trading inside a major retracement zone at .7647 to .7532. This zone is controlling the near-term direction of the Forex pair.
The short-term range is .7812 to .7412. Its retracement zone at .7612 to .7659 is acting like resistance. This zone essentially stopped the rally last week.
The main range is .8135 to .7412. Its retracement zone at .7774 to .7859 is another upside target.
Weekly Swing Chart Technical Forecast
Based on Friday’s close at .7598, the direction of the AUD/USD this week is likely to be determined by trader reaction to the short-term 50% level at .7612.
A sustained move under .7612 will indicate the presence of sellers. If this move generates enough downside momentum, we could see an extension of the selling into .7532. Crossing to the weak side of this level will indicate the selling is getting stronger with potential targets at .7476 and .7412.
A sustained move over .7612 will signal the presence of buyers. This could trigger a quick move into a close series of levels at .7647, .7659 and .7677. The trigger point for an acceleration to the upside is .7677. Taking out this level could trigger an acceleration into .7773.
This article was originally posted on FX Empire
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