The Australian Dollar is trading higher early Friday after plunging yesterday to 55.10, its lowest level since 2002. Relative calm across the global financial markets, along with short-covering and position-squaring ahead of the week-end are underpinning the Aussie. Traders also attributed the early session strength to a rally in the Chinese Yuan.

At 03:16 GMT, the AUD/USD is trading .5845, up 0.0102 or +1.80%.

After surging to .5911, the Australian Dollar trimmed its advance after news of another potential COVID-19 outbreak in Australia made headlines.

Earlier in the week, economists at ANZ Bank warned the Australian economy would shrink 1.9 percent this year, resulting in the national unemployment rate spiking from 5.1 percent to 7.8 percent.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .5510 will signal a resumption of the downtrend. This could lead to a test of the multi-year low at .5448, followed by additional main bottoms at .5398 and .5390.

The main trend will change to up on a trade through .6685. This is highly unlikely, but there is room for a normal 50% to 61.8% correction of the recent sell-off.

The new short-term range is .6685 to .5510. Its retracement zone at .6098 to .6236 is the primary upside target. With the trend down, sellers are likely to come in on a test of this zone.

Daily Technical Forecast

Based on the early price action and the current price at .5845, the direction of the AUD/USD the rest of the session on Friday is likely to be determined by trader reaction to the downtrending Gann angle at .5892.

Bearish Scenario

A sustained move under .5892 will indicate the presence of sellers. The first downside target is 50% of the rally from .5510. This comes in at .5711.

If .5711 fails to hold then look for the selling to possibly extend into a series of main bottoms at .5448, .5398 and 5390.

Bullish Scenario

Over taking .5892 will indicate the buying is getting stronger. This should lead to a test of a steep downtrending Gann angle at .5965.

The Gann angle at .5965 is a potential trigger point for an acceleration to the upside with potential targets a minor 50% level at .6098, followed by a downtrending Gann angle at .6134.

This article was originally posted on FX Empire

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