AUD/USD Forex Technical Analysis – Taking Out .6994 Could Trigger Steep Break

The Australian Dollar is trading lower on Thursday. The price action suggests profit-taking after a steep rally the last two weeks of December. The rally has been fueled by a de-escalation in trade tensions between the United States and China and optimism that easier monetary policy settings will boost global economic growth in the year ahead.

At 09:42 GMT, the AUD/USD is trading .6999, down 0.0018 or -0.26%.

Traders are saying a short-term break in the rally would be welcomed by the Reserve Bank of Australia (RBA). Central bank officials believe the main drag on the economy from a stronger currency would be the impact on international trade, making Australian exports less competitive while simultaneously lowering the cost for imports.

Daily AUD/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7043 will signal a resumption of the uptrend. The main trend will change to down on a move through .6838.

The minor trend is also up. However, a new minor top was formed at .7043 with Thursday’s lower-high and lower-low.

The short-term range is .6838 to .7043. Its 50% level or pivot at .6940 is the first downside target.

The major retracement zone support comes in at .6925 to .6876.

Since the main trend is up, look for buyers on a test of these retracement zones.

Daily Technical Forecast

Based on the early price action and the current price at .6999, the direction of the AUD/USD the rest of the session on Thursday is likely to be determined by trader reaction to a downtrending Gann angle at .7008 and an uptrending Gann angle at .7001.

Bullish Scenario

A sustained move over the downtrending Gann angle at .7008 will indicate the presence of buyers. Taking out the intraday high at .7021 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to possibly extend into a potential resistance cluster at .7043 to .7045.

Bearish Scenario

A sustained move under .7001 will signal the presence of sellers. The first target is an uptrending Gann angle at .6994.

Look for an acceleration to the downside if .6994 fails as support. This could trigger a break into the next uptrending Gann angle at .6958.

This article was originally posted on FX Empire

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