AUD/USD Forex Technical Analysis – July 3, 2018 Forecast

The AUD/USD is trading higher with investors taking advantage of the lack of resistance from U.S. banks ahead of Wednesday’s Fourth of July holiday in the States. Yes, position-squaring and profit-taking, following a prolonged move down in terms of price and time, is the theme today so don’t read too much into the move.

It is possible that the banks extend the holiday until next Monday or Tuesday so if you’re a counter-trend trader then enjoy the break from the selling pressure for at least a couple of days. When the big boys come back, the bear market is likely to continue.

Earlier today, the Reserve Bank of Australia left interest rates unchanged for the 23^rd consecutive meeting. The central bank’s statement was dovish enough to change sentiment for the next rate hike from November 2019 to early 2020.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The AUD/USD is currently posting an inside move which could be an indication of a shift in momentum to up. A trade through .7410 will change the main trend to up, at least temporarily.

A trade through .7310 will signal a resumption of the downtrend.

The main range is .7677 to .7310. If the short-covering rally gains traction then look for the rally to possibly extend into its retracement zone at .7494 to .7537.

Daily Technical Forecast

Based on the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the main top at .7410.

The inability to overcome .7410 will indicate the presence of sellers. This could drive the Aussie back to former tops at .7372 and .7329. If buyers don’t come in then look for the selling to extend into .7310.

Crossing to the weak side of the downtrending Gann angle at .7297 will put the AUD/USD in an extremely bearish position with .7159 the next major target.

A sustained move over .7410 will signal the presence of buyers. This could trigger a further rally into the minor top at .7445.

Look for a spike to the upside over .7445 with potential targets a downtrending Gann angle at .7487 and a 50% level at .7494.

Remember that volume is low so it’ll be easy to buy strength and sell weakness, but difficult to exit if you are wrong. So avoid getting caught in a trap.