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AUD/USD Forex Technical Analysis – Inside Trade Suggests Late Session Volatility

James Hyerczyk

The Australian Dollar retreated from its highest level since December 5 on Friday after an unofficial report showed factory activity in China contracted by the most in almost three years in January. The news confirmed views that the world’s second-largest economy started the new year on a weakening foundation.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 48.3 in January – the second-consecutive month of contraction and the lowest reading since 2016. January’s reading was also weaker than the 49.5 that analysts polled by Reuters expected, and the 49.7 reported in December, CNBC reported.

At 1903 GMT, the AUD/USD is trading .7255, down 0.0019 or -0.27%.

Daily AUD/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7296 will signal a resumption of the uptrend. The main trend will change to down on a trade through .7076.

The minor trend is also up. A trade through .7138 will change the minor trend to down. This will also shift momentum to the downside.

The main range is .7394 to .6764. Its retracement zone at .7153 to .7079 is controlling the longer-term direction of the Forex pair. Holding above this zone will support the current upside bias. Traders should treat this zone as support.

The minor range is .7076 to .7296. Its 50% level or pivot is .7186.

Daily Technical Forecast

The AUD/USD is trading inside yesterday’s range on Friday. This chart pattern indicates investor indecision and impending volatility. Based on the price action late in the session, the direction of the AUD/USD into the close is likely to be determined by trader reaction to the downtrending Gann angle at .7289.

Bullish Scenario

A sustained move over .7289 will indicate the presence of buyers. This could create the upside momentum needed to overcome yesterday’s high at .7296. This should trigger an upside breakout into the next downtrending Gann angle at .7342. This is the last potential resistance angle before the .7394 main top.

Bearish Scenario

A sustained move under .7289 will signal the presence of sellers. Taking out yesterday’s low at .7235 will indicate the selling is getting stronger. This could trigger an acceleration to the downside with the next target a support cluster at .7186 to .7184. This cluster was formed by the short-term pivot and the uptrending Gann angle at .7184.

This article was originally posted on FX Empire

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