AUD/USD Forex Technical Analysis – Approaching Potential Gann Angle Resistance at .6584 and .6592

The Australian Dollar is edging slightly higher on Tuesday after the Reserve Bank of Australia (RBA) announced on Tuesday a cut in the cash rate by 25 basis points to 0.5%, a new record low.

“The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors,” said RBA Governor Philip Lowe in a statement.

A rally after a rate cut usually pressures a currency so today’s early strength is a little surprise. It probably means the news was already priced into the market. Furthermore, in recent days, the chances of a 25 to 50 basis point rate cut by the Federal Reserve have risen to 100 percent. This news is probably offsetting the impact of the RBA cut.

At 07:16 GMT, the AUD/USD is trading .6551, up 0.0009 or +0.13%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A move through .6434 will signal a resumption of the downtrend. The main trend will change to up on a trade through .6750 and reaffirmed on a move through .6774. This is highly unlikely but there is room for a rally into the nearest 50% to 61.8% retracement zone.

The short-term range is .6774 to .6434. That makes its retracement zone at .6604 to .6644 the next likely upside target.

Daily Technical Forecast

There is no trigger point for a breakout on Tuesday, but if the rally continues then look for the move to extend into a pair of downtrending Gann angles at .6584 and .6592. Since the main trend is down, sellers are likely to come in on a test of these angles.

Overcoming .6592 will indicate the short-covering is getting a little stronger. This could lead to a test of the 50% level at .6604. Look for sellers again, but overcoming this level could trigger a surge into the Fibonacci level at .6644.

On the downside, minor support is a 50% level at .6510. If this fails then look for the AUD/USD to drift toward its recent low at .6434.

Crossing to the weak side of a downtrending Gann angle at .6394 will put the AUD/USD in an extremely bearish position.