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James Hyerczyk

The Australian Dollar is being pushed lower early Tuesday by another dovish interest rate decision by the Reserve Bank of Australia (RBA). The central bank voted again to hold its cash rate unchanged at 1.5 percent, as expected by economists. The RBA last adjusted rates in August 2016, cutting the cash rate from 1.75 percent to 1.50 percent, where it has sat for 27 months.

RBA Governor Philip Lowe said the Australian economy enjoyed strong growth over the past year, but noted that U.S. trade policy created an “ongoing uncertainty” for the global outlook.

Lowe also said, “The bank’s central forecast remains for growth to average a bit above 3 percent in 2018 and 2019. Business conditions are positive and non-mining business investment is expected to increase.”

At 0545 GMT, the AUD/USD is trading .7207, down 0.0018 or -0.25%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7202 will signal a resumption of the downtrend. The main trend will change to up on a move through .7314.

Traders tried to shift momentum to the upside with the formation of a closing price reversal bottom on Friday, however, due to the lack of follow-through buying, the potentially bullish chart pattern was never confirmed.

The main range is .7085 to .7314. Its retracement zone at .7200 to .7172 is the primary downside target.

The short-term range is .7314 to .7202. Its retracement zone at .7258 to .7271 is resistance.


Daily Swing Chart Technical Forecast

Based on the current price at .7207 and the downside momentum, the direction of the AUD/USD the rest of the day is likely to be determined by trader reaction to the main 50% level at .7200.

Bullish Scenario

A sustained move over .7200 will indicate the presence of counter-trend buyers. If this creates enough upside momentum, buyers may make a run at .7242. A trade through this level will confirm the reversal bottom. This could trigger a rally into .7258, .7271 and .7285. Since the main trend is down, sellers are likely to come in on a test of this area.

Bearish Scenario

A sustained move under .7200 will signal the presence of sellers. If the selling pressure increases then look for a spike into the Fibonacci level at .7172. We could see a technical bounce on the first test of this level, however, look for an acceleration to the downside with the next target the main bottom at .7142.

Watch the price action and read the order flow on a test of .7200 to .7172 because aggressive counter-trend buyers may attempt to form a secondary higher bottom.

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