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AUD/USD Forex Technical Analysis – August 26, 2016 Forecast

By:
James Hyerczyk
Published: Aug 26, 2016, 13:59 UTC

The AUD/USD surged shortly before Fed Chair Janet Yellen’s speech at 1400 GMT. Thin markets and position-squaring ahead of her speech may have been behind

Australian Dollar

The AUD/USD surged shortly before Fed Chair Janet Yellen’s speech at 1400 GMT. Thin markets and position-squaring ahead of her speech may have been behind the move. Traders may have also been reacting to a preliminary U.S. GDP report that came in as expected at 1.1%, but below the previously reported 1.2%.

Traders will be watching Yellen for clues as to the timing of the next Fed rate hike. She may send a clear signal the Fed is getting ready to raise rates before the end of the year. However, most traders believe she’ll probably say the next rate hike will be data-dependent and that a rate hike in 2016 is just a possibility.

Going into the speech, traders are saying there is a 20 percent chance of a September rate hike, a 50 percent chance of a rate hike in December and a 100 percent chance of a 25-basis point rate hike in September 2017.

Simply stated, if she’s hawkish look for the AUD/USD to weaken. If she comes across as dovish, the AUD/USD could spike higher.

AUD/USD Technical Analysis
Daily AUDUSD

Technically, the main trend is up according to the daily swing chart. A new main bottom was formed at .7583. A trade through this price will turn the main trend to down. The next major upside target is .7755.

The main range is .7420 to .7755. Its retracement zone at .7587 to .7548 stopped the selling earlier in the week with a closing price reversal bottom inside this zone at .7583.

The new short-term range is .7755 to .7583. Its retracement zone at .7669 to .7689 is the primary upside target. The lower or 50% level of this zone was tested earlier today. This zone is important because aggressive counter-trend traders may start selling on a test of the area in an effort to produce a secondary lower top. Buyers are going to try to drive the AUD/USD through the zone in an effort to solidify the .7583 main bottom.

Based on the current price at .7658, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the 50% level at .7669.

A sustained move over .7669 will indicate the presence of buyers. This is followed by a support cluster at .7689 to .7695. This is a potential trigger point for an acceleration into .7725. This is the last potential resistance angle before the .7755 main top.

A sustained move under .7669 will signal the presence of sellers. The first target is a long-term uptrending angle at .7640. Crossing back under the angle at .7635 will put the Aussie in a weak position with .7587 to .7571 the next likely target.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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