The Australian Dollar is rebounding early Monday following the previous session’s steep sell-off that drove the currency to its lowest level since the financial crisis in 2009. The price action suggests that Friday’s weakness may have been fueled by sell-stops rather than aggressive short-selling.
Traders are saying that today’s strength is being fueled by early signs that the spread of the coronavirus epidemic could be slowing down. Traders are also a little more optimistic about China’s economy with some big businesses resuming work in China after the Lunar New Year holiday and coronavirus delays.
At 06:14 GMT, the AUD/USD is trading .6701, up 0.0025 or +0.37%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6662 will signal a resumption of the downtrend. The main trend will change to up on a move through .6774.
The minor range is .6774 to .6662. Its 50% level or pivot at .6718 is the first upside target. This level will likely control the direction of the Forex pair on Monday.
The short-term range is .6934 to .6662. If the trend changes to up then its retracement zone at .6798 to .6830 will become the primary upside target.
Daily Technical Forecast
Based on the early price action and the upside momentum, the first target is a downtrending Gann angle at .6714. Look for sellers on the first test of this angle. Overtaking the Gann angle could lead to a test of the minor 50% level at .6718. Look for sellers on a test of this level too.
Overtaking .6718 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with a pair of downtrending Gann angles at .6744 and .6752 the next potential upside targets.
Since the trend is down and the fundamental narrative remains the same, we are going to continue to look for sellers over the near-term term.
The AUD/USD could be forming a bottom, but it’s too early to tell. At this time, we’re looking for short-covering, but the outlook will change if the trend changes to up on a move through .6774.
This article was originally posted on FX Empire
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