The Australian Dollar is trading higher early Monday on position-squaring and profit-taking following last week’s steep sell-off. Traders could also be moving to the sidelines ahead of Wednesday Reserve Bank of New Zealand (RBNZ) interest rate decision and monetary policy statement. Some traders believe that last week’s steep break was overdone since the Reserve Bank of Australia (RBA) only moved to neutral and it did not actually say it would cut interest rates later in the year.
At 01:23 GMT, the AUD/USD is trading .7105, up 0.0016 or +0.22%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down on a trade through .7076 last Friday. The main trend will change to up on a move through the swing top at .7296. Today is the seventh session down from the last main top which puts it inside the window of time for a potentially bullish closing price reversal bottom.
The main range is .6764 to .7296. Its retracement zone is .7080 to .7154. This zone is controlling the longer-term direction of the AUD/USD. Currently, the Forex pair is trading inside this zone.
The short-term range is .7296 to .7061. Its retracement zone at .7179 to .7206 is the next upside target. Since the main trend is down, sellers are likely to re-emerge on a test of this zone.
Daily Technical Forecast
Based on Friday’s close at .7089 and the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the major 50% level at .7080.
A sustained move over .7080 will indicate the presence of buyers. If this move creates enough upside momentum today then look for the rally to possibly extend into a potential resistance cluster formed by the major Fibonacci level at .7154 and a downtrending Gann angle at .7156.
A sustained move under .7080 will signal the presence of sellers. This could trigger a retest of last week’s low at .7061. If this fails then look for the selling to extend into the major uptrending Gann angle at .7034. Look out to the downside if this angle fails as support.
Please let us know what you think in the comments below.
This article was originally posted on FX Empire
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