AUD/USD Forex Technical Analysis – September 12, 2018 Forecast

The Australian Dollar, a proxy for global growth due to the nation’s significant trade exposure to China, is trading near a 2-½-year low early Wednesday amid concerns Australia’s exporters could suffer from any damage to the Chinese economy from a trade war. The trade has been cautious this week because there is literally no major support until the February 9, 2016 main bottom at .6973.

At 0540 GMT, the AUD/USD is trading .7100, down 0.0020 or -0.29%.

Although the news is overwhelmingly bearish, as trend traders, we still have to respect the possibility of a short-covering rally or a counter-trend reversal to the upside. These usually occur when sellers refrain from shorting weakness. Thursday’s Australian employment report could encourage investors to lighten up on the short side so be careful selling weakness.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7085 will reaffirm the downtrend. The next major downside target is the February 9, 2016 main bottom at .6973, followed by the January 26, 2016 main bottom at .6917.

The main trend is in no position to turn the main trend to up. However, due to the prolonged move down in terms of price and time, the AUD/USD is in the window of time for a closing price reversal bottom. Taking out .7085 then closing above .7117 will form this chart pattern.

The current main range is .7363 to .7085. If there is a short-covering rally then look for a possible rally into its retracement zone at .7224 to .7257.

The minor trend is also down. The minor trend will change to up on a trade through the nearest minor top at .7235. This price falls inside the retracement zone at .7224 to .7257.

Daily Technical Forecast

Based on Tuesday’s close at .7117 and the early price action, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at .7143. This angle, moving down at a pace of .0020 per day from the .7363 has been guiding the AUD/USD lower for 11 sessions, or since August 28.

A sustained move under .7143 will indicate the presence of sellers. If this move creates enough downside momentum then we could see a test of this week’s low at .7085. A failure to hold this level will indicate the selling is getting stronger. This could eventually lead to a test of .6973.

Since the main trend is down, look for a technical bounce on the first test of the downtrending Gann angle at .7143. Overtaking it, however, will indicate the buying is getting stronger, or the selling is getting weaker. If this move is able to create enough upside momentum then look for a potential acceleration to the upside with the first target a 50% level at .7224.