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James Hyerczyk
Australian Dollar and Coins

The Australian Dollar is trading slightly better on Friday, rebounding from early session weakness. The two-sided, light-volume trade is probably being fueled by position-squaring and traders just making a market ahead of a key speech by Federal Reserve Chairman Jerome Powell at 14:00 GMT.

Investors are hoping Powell turns dovish and announces the Fed is willing to cut interest rates multiple times over the next 12 months to perk up the U.S. economy and prevent a global recession. However, they will be disappointed if he reiterates his “mid-cycle adjustment” narrative.

The AUD/USD could rally if Powell comes across as dovish, and break sharply if the Fed chief remains somewhat hawkish about future rate cuts.

At 08:29 GMT, the AUD/USD is trading .6760, up 0.0003 or +0.05%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6677 will signal a resumption of the downtrend. The AUD/USD is in no position to change the main trend to up, but there is room for a normal 50% to 61.8% retracement.

The minor trend is also down. A trade through .6821 will change the minor trend to up. This will shift momentum to the downside. The nearest minor bottom support is at .6736.

The minor range is .6677 to .6821. Its 50% level or pivot at .6749 has been providing support since August 8. This level could control the direction of the AUD/USD today.

The main range is .7082 to .6677. If the minor trend changes to up then its retracement zone at .6880 to .6927 will become the next upside target.


Daily Technical Forecast

Based on the early price action, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the pivot at .6749.

Bullish Scenario

A sustained move over .6749 will indicate the presence of buyers. The first target is an uptrending Gann angle at .6797. Overtaking this angle will indicate the buying is getting stronger. Taking out a pair of highs at .6799 and .6818 could drive the AUD/USD into the minor top at .6821.

Overcoming .6821 will change the minor trend to up. This should trigger a test of the downtrending Gann angle at .6832. This is a potential trigger point for an acceleration into the 50% level at .6880.

Bearish Scenario

A sustained move under .6749 will signal the presence of sellers. The first target is a support cluster formed by an uptrending Gann angle at .6737 and the minor bottom at .6736. If .6736 fail then look for a drive into the next uptrending Gann angle at .6707. This is the last potential support angle before the .6677 main bottom.

If sellers take out .6677 then look out to the downside since the next major target is the March 3, 2009 main bottom at .6285.

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