AUD/USD Forex Technical Analysis – April 22, 2016 Forecast

The AUD/USD posted a potentially bearish closing price reversal top on Thursday. The catalyst behind the selling was a sharp fall in crude oil prices. Oil’s fall was driven by nervous traders taking profits as prices approached the $45.00 a barrel level, which increased the likelihood shale oil producers would ramp up output. The International Energy Agency’s comments that non-OPEC production would fall this year by the most in a generation also weighed on crude prices.

Also pushing the Australian Dollar lower was an unexpected decline in U.S. jobless claims last week. This news drove up U.S. Treasury yields, helping to underpin the U.S. Dollar.

The market’s focus is now turning to next week’s busy central bank calendar with the U.S. Federal Reserve, the Reserve Bank of New Zealand and the Bank of Japan to decide on interest rates.

Technically, the main trend is up according to the daily swing chart. However, the closing price reversal top indicates that momentum may have shifted to the downside along with investor sentiment. The break through .7732 earlier today confirmed the potentially bearish chart pattern.

Typically, once confirmed, a closing price reversal leads to a 2 to 3 day break equal to 50% to 61.8% of the last rally.

Based on the close at .7737 and the early price action, the direction of the market today is likely to be determined by trader reaction to the July 1, 2015 main top at this same price.

A sustained move over .7737 will indicate the presence of buyers with the first target a steep downtrending angle at .7754. This could trigger a surge into the next downtrending angle at .7794.

A sustained move under .7737 will signal the presence of sellers. The first target is an uptrending angle at .7711. There could be a technical bounce off this level like there was on April 18, but it sellers take it out then look for an acceleration to the downside with the next target the short-term 50% level at .7662 and the long-term Fibonacci level at .7652.

Look for a downside bias on a sustained move under .7737 and an upside bias on a sustained move over .7754. The direction of crude oil prices today will dictate the price action and direction of the AUD/USD all session.