AUD/USD Forex Technical Analysis – May 27, 2016 Forecast

The AUD/USD is trading lower while posting an inside move. The lack of follow-through to the upside after Thursday’s spectacular rally suggests the move was triggered by short-covering in reaction to a news event rather than new buying. Oversold conditions also made the market ripe for a short-covering rally.

The main trend is down according to the daily swing chart. The main trend will turn up on a trade through the .7259 swing top. A trade through .7145 will signal a resumption of the downtrend.

The short-term range is .7259 to .7145. Its 50% or pivot is at .7202. This price is controlling the short-term direction of the market.

The key retracement zone on the longer-term chart is .7330 to .7211. The market is currently straddling the lower or 61.8% level of this range at .7211 while trying to re-establish inside the retracement zone.

The current price is .7219 which makes the long-term Fib level at .7211 the first support, followed by the short-term uptrending angle at .7205 and the short-term pivot at .7202. These prices are strong enough to produce intraday technical bounces, but if they fail the market could drop sharply into an uptrending angle at .7175.

Holding above .7211 will indicate the presence of buyers, both the AUD/USD will have to chew through downtrending angles at .7239 and .7249 before it can even test the .7259 main top.

Breaking out over .7259 will turn the main trend to up. The market can run over this price because the next resistance doesn’t come in until .7313.

Trading activity is light right now but volume and volatility should pick up, following the release of the U.S. preliminary GDP report at 1230 GMT.