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AUD/USD Forex Technical Analysis – May 6, 2016 Forecast

By:
James Hyerczyk
Published: May 6, 2016, 13:01 UTC

The AUD/USD fell nearly 1 percent early Friday after the central bank slashed its inflation forecasts and markets rushed to price in not one, but two more

AUD/USD Forex Technical Analysis – May 6, 2016 Forecast

The AUD/USD fell nearly 1 percent early Friday after the central bank slashed its inflation forecasts and markets rushed to price in not one, but two more rate cuts this year. This is bearish news over the long-run. Today, however, we could see a slight bounce from the earlier lows because of the weak U.S. Non-Farm Payrolls report.

Treasury yields fell after the release of today’s jobs data, making the U.S. Dollar a less-attractive investment. The report showed the economy added 160,000 jobs in April. Economists were looking for 203,000. This greatly reduces the chances of a June rate hike.

Daily AUD/USD

Technically, the main trend is down according to the daily swing chart.

The main range is .7107 to .7834. Its retracement zone is .7470 to .7385. This was the primary downside target, however, the selling was strong enough earlier in the session to take it out. A sustained move under the retracement zone will put the AUD/USD in an extremely weak position.

Based on the current price at .7365, the direction of the market the rest of the session is likely to be determined by trader reaction to the downtrending angle at .7394 and the long-term uptrending angle at .7352.

Look for an upside bias to develop on a sustained move over .7394 and a downside bias on a sustained move under .7352.

Taking out .7394 will signal the presence of buyers with the next major upside target coming in at .7470.

A sustained move under .7352 will indicate the presence of sellers. The daily chart indicates there is plenty of room to the downside with the next major target coming in at .7230.

We could see volatility the rest of the session since the inflation news from Australia is bearish and the U.S. jobs report is bullish. Don’t expect too much of a move to the upside, however.

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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