AUD/USD Forex Technical Analysis – Trader Reaction to .7733 Fibonacci Level Sets the Tone

The Australian Dollar is trading slightly lower early Wednesday as investors looked to the U.S. Federal Reserve’s policy meeting for indications it could start rate hikes earlier or let bond yields rise further. Weakness in commodity prices also weighed on the commodity-linked Aussie.

At 06:29 GMT, the AUD/USD is trading .7736, down 0.0009 or -0.12%.

With Fed policymakers expected to forecast the fastest U.S. economic growth in decades in the wake of COVID-19 vaccinations and $1.9 trillion in new stimulus, market participants will be focused on cues that the central bank could start raising interest rates in 2023, earlier than it had said.

A dovish Fed could spike the Australian Dollar higher.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of a closing price reversal bottom on March 9. A trade through .7621 will signal a resumption of the downtrend. The main trend changes to up on a move through the nearest swing bottom at .8007.

The minor trend is also down. A trade through .7800 will change the minor trend to up. This will confirm the shift in momentum.

The main retracement zone at .7733 to .7786 is controlling the near-term direction of the AUD/USD.

The minor range is .7621 to .7800. Its retracement zone at .7710 to .7689 is potential support.

The short-term range is .8007 to .7621. Its retracement zone at .7814 to .7860 is the primary upside target and potential resistance area. Since the main trend is down, look for sellers on the first test of this area.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main Fibonacci level at .7733.

Bullish Scenario

A sustained move over .7733 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into a minor resistance cluster at .7786, .7800 and .7814.

Bearish Scenario

A sustained move under .7733 will signal the presence of sellers. The first downside target is the minor range at .7710 to .7689.

The minor Fibonacci level at .7689 is a potential trigger point for an acceleration to the downside with the main bottom at .7621 the next likely downside target.