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The Australian Dollar finished lower on Friday in very limited trading because of bank holidays in Australia and the United States. The Aussie also finished down for the week while posting its lowest close since March 21.
A bearish tone continued to dominate the trade as investors reacted to more hawkish comments from Federal Reserve officials, which reinforced expectations for faster U.S. policy tightening.
On Friday, the AUD/USD settled at .7395, down 0.0023 or -0.31%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) finished at $73.82, down $0.01 or -0.01%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .7391 will signal a resumption of the downtrend.
A move through .7661 will change the main trend to up. This is highly unlikely, but the market will begin Monday’s session inside the window of time for a potentially bullish closing price reversal bottom. This won’t change the main trend to up, but if confirmed, it could fuel the start of a 2 to 3 day counter-trend rally.
The minor trend is also down. A trade through .7494 will change the minor trend to up. This will also shift momentum to the upside.
The short-term range is .7165 to .7661. The AUD/USD is currently testing its retracement zone at .7413 to .7354. This zone is controlling the near-term direction of the Forex pare.
On the upside, the major resistance is the long-term retracement zone at .7429 to .7538.
Short-Term Outlook
The direction of the AUD/USD early Monday will be determined by trader reaction to the pair of 50% levels at .7413 and .7429.
Bearish Scenario
A sustained move under .7413 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly continue into the Fibonacci level at .7354. This is a potential trigger point for an acceleration to the downside with .7165 the next major target.
Bullish Scenario
A sustained move over .7429 will signal the presence of buyers. If this move creates enough upside momentum then look for a possible surge into the minor top at .7494. Overtaking this level will indicate the counter-trend buying is getting stronger with the long-term Fibonacci level at .7538 the next major target.
Side Notes
If a closing price reversal is going to form then it will likely take place inside the short-term retracement zone at .7413 – .7354. Watch the price action and read the order flow inside this zone.
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This article was originally posted on FX Empire