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The Australian Dollar is trading slightly lower early Friday following yesterday’s sharp break. The Aussie weakened against the greenback due to a widening interest rate differential, an unsupportive risk backdrop and the U.S.-China trade dispute.
At 1216 GMT, the AUD/USD is at .7258, down 0.0005 or -0.08%.
Additional factors pressing the AUD/USD are renewed jitters in emerging markets, and renewed doubt over when and if the Reserve Bank of Australia (RBA) will be able to lift official interest rates.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .7238 will signal a resumption of the downtrend. The main trend will change to up on a move through .7363.
The main range is .7453 to .7202. Its retracement zone at .7328 to .7357 is the primary resistance. This zone stopped the rally on Tuesday when the AUD/USD stopped at .7363.
The minor range is .7238 to .7363. On Thursday, the Forex pair crossed to the weak side of its retracement zone at .7286 to .7301. This area is new resistance.
Daily Swing Chart Technical Forecast
Based on Thursday’s close at .7258 and the early price action, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the short-term Fib at .7286.
A sustained move under .7286 will indicate the presence of sellers. Taking out yesterday’s low at .7249 will indicate the selling is getting stronger. This could trigger a further break into the main bottom at .7238.
The main bottom at .7238 is a potential trigger point for an acceleration to the downside with another main bottom at .7202 the next downside target. If this bottom fails then look for the selling to extend into the December 23, 2016 main bottom at .7159.
Overtaking .7286 will signal the return of buyers. This could trigger a short-covering rally into .7301. This is a potential trigger point for an acceleration into .7327.
Basically, barring a major shift in the fundamentals, or aggressive end of the month position-squaring, the momentum is likely to continue to trend lower. The bottoms at .7238 and .7202 are potential trigger points for accelerations to the downside, but low pre-holiday volume could limit the follow-through selling.
This article was originally posted on FX Empire