The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main 50% level at .7770.
The Australian Dollar is trading lower on Wednesday after sellers rejected the currency’s attempt to advance over a key 50% level that has proved to be strong resistance for several weeks. Upbeat domestic data and strength in global commodity prices failed to shift momentum to the upside.
At 07:04 GMT, the AUD/USD is trading .7732 down 0.0019 or -0.25%.
Government figures released earlier in the session showed the Australian economy expanded by a healthy 1.8% in the first quarter, taking gross domestic product (GDP) back above pre-pandemic levels. It also sets up the current quarter for annual growth of 10% or more.
Despite the stronger-than-expected growth report, news that the state of Victoria had extended its coronavirus lockdown for another seven days also overshadowed the better data and came as a blow to the Aussie.
The main trend is down according to the daily swing chart. A trade through .7796 will change the main trend to up. A move through .7677 will signal a resumption of the downtrend.
The minor trend is also down. A new minor top was formed earlier in the session at .7774. A trade through this level will change the minor trend to up.
The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance. This zone recently stopped rallies at .7814, .7796 and .7774
The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is potential support. It recently stopped the sellers at .7677 on May 28.
The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main 50% level at .7770.
A sustained move under .7769 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the short-term 50% level at .7711.
Aggressive counter-trend buyers could come in on the first test of this level. If it fails then look for the selling to possibly extend into a pair of main bottoms at .7677 and .7675, followed by the short-term Fibonacci level at .7669.
A sustained move over .7770 will signal the presence of buyers. Taking out the minor top at .7774 will shift momentum to the upside. This could extend the rally into the next main top at .7796. Taking out this level will change the main trend to up and could trigger a further rally into the main top at .7814 and the main Fibonacci level at .7826.
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.