AUD/USD Forex Technical Analysis – Pivot at .7931 Controlling Near-term Direction
The AUD/USD bounced back a little on Monday after Friday’s steep sell-off. The Forex pair is being supported by an optimistic outlook for higher interest rates due to the perception that the Reserve Bank of Australia has turned hawkish. Speculators developed this idea last week after the minutes of the RBA’s July 4 monetary policy meeting were released.
Last week’s rally stalled and the market became rangebound after a RBA official tried to stop the rally and dispel the idea of higher interest rates by saying that investors had read too much into the minutes and that the central bank would not consider a rate hike until the economy hit certain benchmarks in labor and inflation.
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Technically the main trend is up according to the daily swing chart. A trade through .7988 will signal a resumption of the uptrend.
The best way to look at this market at this time is by analyzing the retracement levels. This tend to tell us if the buying or selling is getting stronger.
The low before the minutes were released last Tuesday was .7786. This spiked the market into .7988. After the RBA official made his dovish comments, the AUD/USD broke sharply into .7874. This move drove the market inside the retracement at .7887 to .7863. This is the key support zone.
The new short-term retracement zone is .7988 to .7874. Its 50% level or pivot is .7931. Trader reaction to this level will tell us if the buying is getting stronger or if sellers are taking control.
Look for a retest of .7988 if buyers can build support above .7931.
A sustained move under .7931 will mean sellers are taking control. This could create the downside momentum needed to test the 50% level at .7887, the low at .7874 and the Fibonacci level at .7863.
Look out to the downside if .7863 fails as support. The daily chart indicates there is room to the downside under this level with potential near-term targets .7786 to .7779.