Australia markets closed

AUD/USD Forex Technical Analysis – Rangebound Trade Suggests Trader Indecision, Impending Volatility

James Hyerczyk

The Australian Dollar is inching lower on Friday while trading in a tight trading range. The volume appears to be below average with China on a bank holiday. Today’s early two-sided price action is being fueled by a choppy trade in the global equity markets. Risk sentiment has been the key price driver this week and its influence is continuing on Friday.

At 08:46 GMT, the AUD/USD is trading .6885, down 0.0002 or -0.03%.

Liquidity issues are also back in focus amid concerns over a second-wave of coronavirus infections in the United States. This is causing investors to lighten up positions in higher-yielding stocks and currencies like the Australian Dollar.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .6811 will change the main trend to down and a move through .6800 will confirm the change in trend. A trade through the main top at .6977 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through .6975 will change the minor trend to up.

The first minor range is .7065 to .6800. Its 50% level or pivot at .6933 is resistance. This level is also controlling the near-term direction of the AUD/USD.

The second minor range is .6506 to .7065. Its 50% level at .6785 is support.

The short-term range is .6402 to .7065. Its retracement zone at .6733 to .6655 is a key support zone.

Daily Swing Chart Technical Forecast

We’re not getting a good reading on the market at this time due to the low volume and the lack of trader conviction. We do know that risk sentiment will drive the price action.

A bullish tone in the global equity markets is likely to trigger a surge into the first minor pivot at .6933. Overcoming and sustaining a rally over this level will indicate the return of buyers.

A sustained move under .6933 will indicate the presence of counter-trend sellers. Taking out .6847 will be another sign of weakness, while a failure at .6811 could fuel the start of an acceleration to the downside.

Side Notes

The AUD/USD looks like it is getting ready to roll over to the downside, but will need help from the outside markets to start the process of unraveling the current bullish trade. “Risk-on” and “Risk-off” will set the tone.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire