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James Hyerczyk

Increased demand for higher risk is helping to boost the Australian Dollar on Wednesday. The move is being generated by investors selling the U.S. Dollar following the announcement of new tariffs by the United States and a retaliation by China. The price action suggests that investors believe the tariffs were not as bad as previously feared.

At 0706 GMT, the AUD/USD is trading .7246, up 0.0027 or +0.39%.


Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up earlier today when buyers took out the previous main top at .7230. The new main bottom is .7142. A trade through this level will change the main trend to down.

The main range is .7363 to .7085. The market is currently trading inside its retracement zone at .7224 to .7257. Trader reaction to this zone is important to the current market structure.

Aggressive sellers may start to show up on a test of this zone. They will be trying to form a secondary lower top. Buyers are going to try to breakout to the upside in an effort to build on the uptrend.


Daily Technical Forecast

Based on the current price at .7246, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the Fibonacci level at .7257.

A sustained move under .7257 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to extend into the 50% level at .7224, and an uptrending Gann angle at .7205.

The trigger point for an acceleration to the downside is the angle at .7205.

Overcoming the Fib level at .7257 will indicate the buying is getting stronger. This could drive the market into a downtrending Gann angle at .7283. We could see sellers on the first test of this angle. However, if taken out with strong buying volume, the AUD/USD could surge into the next resistance angle at .7323. This is the last potential resistance angle before the .7363 main top.

Basically, the key to sustaining this rally is to take out the retracement zone at .7224 to .7257.

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