The AUD/USD closed higher last week while posting an inside move. The chart pattern indicates investor indecision and impending volatility. The Forex pair performed well last week despite a soft assessment of the economy by the Reserve Bank of Australia.
Concerns over U.S. tax reform drove U.S. Treasury yields lower, weakening the U.S. Dollar and making the Australian Dollar a more attractive investment. The AUD/USD could continue to attract buyers if problems with tax reform become a lingering issue.
Weekly Technical Analysis
The main trend is down according to the weekly swing chart. A trade through .7624 will signal a resumption of the downtrend.
The main range is .7329 to .8124. Its retracement zone at .7727 to .7632 is currently being tested. This retracement zone has provided support the last three weeks.
The retracement zone is essentially controlling the longer-term direction of the AUD/USD.
The short-term range is .8124 to .7624. If there is a successful breakout to the upside then its retracement zone at .7874 to .7933 will become the primary upside target.
Weekly Technical Forecast
Based on last week’s close at .7656 and the price action, the direction of the AUD/USD this week is likely to be determined by trader reaction to the Fibonacci level at .7632.
A sustained move over .7632 will signal the presence of buyers. This could create enough upside momentum to challenge the 50% level at .7727, followed by a downtrending angle at .7724.
The trigger point for an acceleration to the upside is .7724.
A sustained move under .7632 will indicate the presence of sellers. This could lead to a quick test of a low at .7624, followed by a longer-term uptrending angle at .7599.
The angle at .7599 is a potential trigger point for an acceleration to the downside. The weekly chart indicates there is room to break with targets at .7469 and eventually .7329.
This article was originally posted on FX Empire
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