Based on the early price action, the direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the uptrending Gann angle at .6967.
The Australian Dollar is under pressure early Thursday after Reserve Bank of Australia (RBA) Governor Philip Lowe said that lower rates could be coming if needed.
At a speaking engagement in Canberra on “Inflation Targeting and Economic Welfare” Lowe opened the door to cutting official interest rates even further while in effect committing itself to keep them at ultra-low levels for an extended period. Even with the economy’s overall fundamentals strong, Lowe said the RBA was prepared to produce faster growth by taking the official cash rate below its current level of 1 percent.
At 06:20 GMT, the AUD/USD is trading .6968, down 0.0011 or -0.16%.
The main trend is down according to the daily swing chart. The main trend turned down on Tuesday when sellers took out the main bottom at .6996. The next potential main bottom is .6911. The main trend will change to up on a trade through .7082.
The main range is .6832 to .7082. Its retracement zone at .6957 to .6927 is the next downside target. This zone is controlling the near-term direction of the AUD/USD so don’t be surprised by a technical bounce on the first test of this area. Prices will drop further if this zone fails as support.
On the upside, the retracement zone resistance is .7019 to .7063.
Based on the early price action, the direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the uptrending Gann angle at .6967.
A sustained move over .6967 will indicate that buyers are coming in before the 50% level at .6957. If they are able to generate enough upside momentum then look for the rally to possibly extend into the downtrending Gann angle at .7002.
A sustained move under .6967 will signal the presence of sellers. The first target is the 50% level at .6957. Watch for a technical bounce on the first test of this level. If it fails then watch for an acceleration to the downside with the next target the Fibonacci level at .6927.
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.