U.S. Markets closed

AUD/USD Forex Technical Analysis – Bullish Tone Continues Over .6925, Bearish Tone Develops Under .6876

James Hyerczyk

The Australian Dollar is trading higher on Friday with traders continuing to react to the Fed’s interest rate cut on Wednesday and lower expectations for a rate cut by the Reserve Bank of Australia in November.

On Friday, the U.S. economic data came in mixed. The Non-Farm Payrolls report was much stronger than expected with the headline number beating the forecast and average hourly earnings coming in solid. However, the ISM Manufacturing PMI report showed another contraction while coming in below the estimate.

At 19:41 GMT, the AUD/USD is trading .6912, up 0.0018 or +0.27%.

The news was bullish near the end of the session after China said Friday that it reached a consensus with the U.S. in principle after a phone call among high-level trade negotiators.


Daily Technical Analysis

The main trend is up according to the daily swing chart. The next major top comes in at .7082 so there is plenty of room to the upside. The main trend will change to down on a trade through the last swing bottom at .6809.

The main range is .7082 to .6671. Its retracement zone at .6876 to .6925 is currently being tested. This zone is controlling the near-term direction of the AUD/USD.

Daily Technical Forecast

Based on the early price action and the current price at .6912, the direction of the AUD/USD into the close is likely to be determined by trader reaction to the Fibonacci level at .6925.

Bullish Scenario

Overtaking and sustaining a rally over .6925 will indicate the presence of buyers. If this move creates enough upside momentum late in the day or early Monday then look for the rally to possibly extend into the nearest downtrending Gann angle at .6980.

Bearish Scenario

The inability to overcome .6925 will signal the presence of sellers. Crossing to the weak side of the downtrending Gann angle at .6895 will indicate the selling is getting stronger. This could trigger a break into the 50% level at .6876.

Look for an acceleration into the nearest uptrending Gann angle at .6844 if sellers take out .6876 with rising volume and conviction.

Side Notes

The AUD/USD is currently testing a major 50% to 61.8% retracement zone. Trader reaction to this zone will determine the near-term direction of the Forex pair.

Basically, look for the bullish tone to continue on a sustained move over .6925. Look for a bearish tone to develop on a sustained move under .6876.

This article was originally posted on FX Empire