AUD/USD Forex Technical Analysis Trading on Weak Side of Long-Term Retracement Zone

The Australian Dollar closed lower in Friday’s limited trade. Bank holidays in Australia and the U.S. weighed on the price action.

The AUD/USD settled at .7676, down 0.0002 or -0.03%.

The main concern for investors at this time are worries over a possible trade war between the U.S. and Australia, falling demand for higher risk assets and rising U.S. interest rates.

The main trend is down according to the daily swing chart. A trade through .7642 will signal a resumption of the downtrend. The main trend will change to up on a move through .7784.

The minor trend is also down. However, Friday’s price action helped form a minor bottom at .7642.

The short-term range is .7784 to .7642. Its retracement zone at .7713 to .7730 is the primary upside target. Since the main trend is down, traders should treat this zone like resistance.

The long-term retracement zone is .7743 to .7818. This zone is controlling the longer-term direction of the market. Closing below this zone is also helping to give the Forex pair a downside bias.

We’re expecting the longer-term downside bias to continue as long as the AUD/USD remains under .7743. Although the trend will change to up on a move through .7784, we don’t think we’re going to see an acceleration to the upside unless buyers can overtake .7818.

With the main trend down, we’re expecting to continue to see the formation of lower tops and lower bottoms. A move into .7713 to .7730 will likely attract sellers. They’re going to try to form a secondary lower top. If they do then the market is likely to rollover to the downside with .7642 the next major target.

Taking out this level with rising selling volume will likely fuel an eventual move into the December 8 main bottom at .7501.

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