Australia Markets closed

AUD/USD Forex Technical Analysis – Series of Inside Moves Indicates Impending Volatility

James Hyerczyk

The Australian Dollar closed sharply lower on Thursday after an early session rally failed to generate enough upside momentum to breakout to the upside. Falling commodity prices and U.S. dollar strength weighed on the currency. The dollar was driven higher by a sell-off in the Euro after the European Central Bank’s monetary policy decision.

The AUD/USD settled on Thursday at .7786, down 0.0039 or -0.41%.

With the U.S. set to report Non-Farm Payrolls on Friday, trade wars and tariffs are likely to take a backseat early in the session.


Daily Swing Chart Analysis

The main trend is down according to the daily swing chart. However, short-term momentum is trending higher. A trade through .7712 will signal a resumption of the downtrend.

The minor trend is down. A move through .7842 will reaffirm the minor trend.

The major retracement zone is .7818 to .7743. This zone is controlling the longer-term direction of the Aussie. The Forex pair is currently trading inside this zone.

The short-term range is .7712 to .7842. Its 50% level or pivot at .7777 is controlling the short-term direction of the market this week. Holding above it is giving the Aussie a slight upside bias.

The intermediate range is .7988 to .7712. Its retracement zone at .7850 to .7883 is the primary upside target. Since the main trend is down, sellers may come in on a test of this zone.

Daily Swing Chart Forecast

Based on Thursday’s close at .7786 and the price action the last three sessions, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the short-term pivot at .7777.

A sustained move over .7777 will indicate the presence of buyers. If this generates enough upside momentum, we could see a rally into .7818. This is a potential trigger point for an acceleration into .7842, followed closely by .7850.

We could see an acceleration to the downside if .7777 is taken out with conviction. This could create enough downside momentum to challenge .7743, followed by .7712.

This article was originally posted on FX Empire