AUD/USD Forex Technical Analysis – Look for Steep Break if Wage Price Index Misses to Downside
The Australian Dollar eked out a small gain on Tuesday as traders failed to respond to optimistic comments from President Trump over a U.S.-China trade deal. Increased demand for risky assets also failed to draw the attention of buyers.
Rising U.S. Treasury yields likely weighed on the Aussie as it highlighted the divergence in monetary policies between the relatively hawkish U.S. Federal Reserve and the dovish Reserve Bank of Australia.
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Investors are also preparing for the release of the Westpac Consumer Sentiment report and the most important Wage Price Index data. This report could help determine the timing of the highly expected RBA rate cut. China is also set to release a slew of economic data that could impact Aussie prices.
On Tuesday, the AUD/USD settled at .6945, up 0.0001 or +0.01%. At 00:48 GMT, the Forex pair is at .6928, down 0.0016 or 0.23%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The main trend will change to up on a trade through .7069. The daily indicates there is room to the downside with the January 3, 2019 main bottom at .6764 the primary downside target.
The minor trend is also down. A trade through .7019 will change the minor trend to up. This will shift momentum to the upside.
The AUD/USD is also trading on the weak side of a retracement zone at .6967 to .7030. This zone is resistance.
Daily Swing Chart Technical Forecast
Based on the early price action and the prolonged move down in price and time, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to yesterday’s close at .6945.
Bearish Scenario
A sustained move under .6945 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the uptrending Gann angle at .6882. Look for a technical bounce on the first test of this angle.
If .6882 fails then look for the selling pressure to increase with the next uptrending Gann angle coming in at .6822. This is the last potential support angle before the .6764 main bottom.
Bullish Scenario
A sustained move over .6945 will signal the presence of buyers. This will also put the AUD/USD in a position to form a potentially bullish closing price reversal bottom. This would change the trend to up, but it could trigger the start of a 2 to 3 day counter-trend rally.
The first upside target is the Fibonacci level at .6967. Overcoming it could trigger a further rally into the downtrending Gann angle at .7006. This angle has been guiding the market lower since the .7206 main top on April 17.
Look for volatility with the release of the Wage Growth Index. It is expected to come in at 0.6%. The AUD/USD should rally if the number comes in bigger-than-expected.
A lower number will increase the chances of an RBA rate cut in June. This should trigger a break in the AUD/USD.