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AUD/USD Forex Technical Analysis – Strengthens Over .7640, Weakens Under .7567

James Hyerczyk
·2 min read

The Australian Dollar finished slightly lower on Friday with in a volatile two-sided session as the U.S. Dollar rebounded from a two-and-a-half-year low as some speculators squared positions and booked profits into year-end.

A dip in demand for risky assets may have weighed on the Aussie, while boosting interest in the safe-haven greenback. Sentiment fell as investors worried about the stalemate in Congress over coronavirus stimulus and the uncertainty over Brexit.

On Friday, the AUD/USD settled at .7622, down 0.0006 or -0.07%.

Daily AUD/USD
Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7640 will signal a resumption of the uptrend, while a move through the June 6, 2018 main top at .7677 will reaffirm the uptrend. The main trend will change to down on a move through .7339.

The minor trend is also up. A trade through .7507 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is .7507 to .7640. Its 50% level at .7573 is support.

The second and third minor support level come in at .7506 and .7489, respectively.

Daily Swing Chart Technical Forecast

The inside move on Friday indicates investor indecision and impending volatility. It could be an early sign that momentum is transitioning from up to down, especially if risk sentiment changes and investors head into the U.S. Dollar for protection.

A trade through .7640 will be a bullish sign. This could trigger a rally into the June 6, 2018 main top at .7677. A test of this level could give traders a valid excuse to book profits so don’t be surprised if sellers start to show up.

The prolonged move up in terms of price and time could also lead to the formation of a closing price reversal top. This won’t change the trend to down, but it could trigger the start of a 2 to 3 day correction.

On the downside, taking out the first pivot at .7573 will be a sign of weakness, while a move through .7567 could trigger an acceleration to the downside with the first target a support cluster at .7507 to .7506, followed by .7489.

Side Notes

Although the main trend is up, the AUD/USD could be vulnerable to a short-term correction due to year-end position-squaring, profit-taking or a shift in sentiment. The best sign of a major top will be a closing price reversal top following a test of .7677.

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

This article was originally posted on FX Empire

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