AUD/USD Forex Technical Analysis – April 1, 2019 Forecast

Better-than-expected economic data from China is helping to drive the Australian Dollar higher on Monday. The news is dampening concerns over a slowing global economy, while increasing appetite for riskier assets. Furthermore, just two days before the Reserve Bank of Australia’s interest rate and policy decisions, the news could mean the central bank will continue to keep any rate changes on hold. This is spooking some of the short-sellers anticipating a dovish tone from the RBA.

At 02:23 GMT, the AUD/USD is trading .7124, up 0.0028 or +0.40%.

The major event that has global investors excited is the news that China’s official manufacturing PMI picked up in March after posting three months of declines. The report, released over the week-end, showed a rise of 1.3 points to 50.5, pulling the survey out of a contraction.

The good news from China continued on Monday with a private survey showing manufacturing activity in China expanding unexpectedly in March after shrinking for three straight months. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 50.8 for March. Traders were looking for a reading of 49.9 for a second month.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7041 will change the main trend to down. A move through .7168 will signal a resumption of the uptrend.

The minor trend is down. This explains the shift in momentum to the downside. The minor trend will change to up on a trade through .7148. This will shift momentum to the upside. A move through .7064 will signal a resumption of the downtrend.

The market is currently trading inside a pair of retracement zones. The main retracement zone is .7079 to .7153. Inside this zone is a minor retracement zone at .7105 to .7129. Trader reaction to this zone will determine the longer-term direction of the AUD/USD.

Daily Technical Forecast

Based on the early price action, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the minor 50% level at .7105 and the minor 61.8% level at .7129.

Bullish Scenario

A sustained move over .7105 will indicate the presence of buyers. Taking out .7129 will indicate the buying is getting stronger. A drive through the downtrending Gann angle at .7133 could trigger an acceleration to the upside with the next targets a downtrending Gann angle at .7151, the Major Fib level at .7153 and the main top at .7168.

Bearish Scenario

A sustained move under .7129 will signal the presence of sellers. If this creates enough downside momentum then look for a retest of the 50% level at .7105. Taking out this level will indicate the selling is getting stronger. This could lead to an eventual test of a downtrending Gann angle at .7098, followed by an uptrending Gann angle at .7083.

Obviously the news from China was friendly enough to trigger a spike to the upside on Monday. However, gains could be capped by U.S. economic data later in the session as well as position-squaring ahead of Tuesday’s RBA interest rate decision and rate statement.