AUD/USD Forex Technical Analysis – Short-Term Bullish Over .7470, Bearish Under .7437

The Australian Dollar closed slightly lower last week, but with a strong finish. The currency opened on Monday with a bullish tone, but quickly sold off after the U.S. announced it was considering new tariffs on China. However, investors shrugged off this news as the week progressed, leading to decent rally during the latter half of the week. Traders said the buying was related to increased demand for risky assets.

For the week, the AUD/USD settled at .7425, down 0.0002 or -0.03%.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart, however, momentum may be starting to shift to the upside with the formation of the closing price reversal bottom the week-ending July 6 and the subsequent confirmation of the chart pattern last week.

A trade through .7310 will negate the reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through .7677.

The short-term range is .7677 to .7310. Its 50% level or pivot at .7494 is the next upside target. Trader reaction to this level should set the tone for the next big move.

Additional resistance is the longer-term retracement zone at .7532 to .7647.

Weekly Technical Forecast

Based on last week’s price action and the close at .7425, the direction of the AUD/USD this week is likely to be determined by trader reaction to a downtrending Gann angle at .7437.

A sustained move over .7437 will indicate the presence of buyers. Overcoming the uptrending Gann angle at .7470 will indicate the buying is getting stronger. This could lead to a test of the pivot at .7494, followed by a Fib level at .7532 and a pair of downtrending Gann angles at .7552 and .7557.

A sustained move under .7437 will signal the presence of sellers. The first downside target is a short-term uptrending Gann angle at .7390, followed by another uptrending Gann angle at .7350. This is the last potential support angle before the .7310 main bottom.

The main bottom at .7301 has to hold, or the AUD/USD will eventually plunge to .7159.

Keep in mind that we are looking a weekly, short-term, counter-trend moves here. The longer-term trend is down and likely remain down due to the divergence in monetary policy between the Fed and the RBA.

If you don’t want to play a counter-trend rally then use the upside targets to initiate new short positions if tested.