AUD/USD Forex Technical Analysis – August 2, 2017 Forecast

The AUD/USD is trading nearly flat shortly before the U.S. opening after recovering from an early session sell-off. The early price action was likely a reaction to Tuesday’s Reserve Bank of Australia’s statement: “An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.” Despite issuing soft language on the strength of the currency, traders were surprised the RBA didn’t make more of an effort to talk the Australian Dollar down.

The Forex pair has also been under pressure since last Thursday after Goldman Sachs issued a sell signal. Despite all the “overvalued” talk, the Aussie Dollar is hanging tough. Most of this support may not even be related to the Australian economy but rather the weaker U.S. Dollar. Traders should watch for volatility following the release of today’s U.S. ADP Employment Change report at 1215 GMT.

Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may have shifted to the downside with the formation of the closing price reversal top on July 27.

A trade through .8042 will reaffirm the minor uptrend. A move through .8065 will negate the closing price reversal top and signal a resumption of the main trend.

A trade through .7936 will change the minor trend to down. The main trend will change to down on a trade through .7874.

The price action is also being controlled by a series of retracement levels. Resistance levels come in at .7969 and .8000. Support is .7925 and .7893.

Taking out .7874 will not only change the trend to down, but it could also trigger an acceleration to the downside with .7818 the next major target.

Forecast

Based on the current price at .7966, the direction of the AUD/USD is likely to be determined by trader reaction to the resistance cluster at .7969 to .7971.

A sustained move over .7971 will indicate the presence of buyers. This could trigger a move into .8000. Overcoming this level will mean the buying is getting stronger with .8042 and .8065 the next likely targets.

A sustained move under .7969 will signal the presence of sellers. This could trigger a break into .7925, .7893 and .7874. The trigger point for an acceleration to the downside is .7874.