AUD/USD Forex Technical Analysis – December 1, 2016 Forecast

The AUD/USD plunged on Wednesday in reaction to higher U.S. Treasury yields. Yields were up as investors priced in the inflationary effects of higher crude oil prices after OPEC agreed to production cuts in order to reduce the global supply glut. Higher yields were also supported by stronger-than-expected private sector jobs data, and rising personal income and spending.

The spread between Australian Bonds and U.S. 30-year Bonds also tightened, indicating that investors were shedding Aussie debt in favor of U.S. debt.

Today, investors will get the opportunity to react to the U.S. weekly unemployment claims report and ISM Manufacturing PMI.

Technically, the main trend is down according to the daily swing chart. The main trend will turn up on a trade through .7497. A trade through .7311 will signal a resumption of the downtrend. This is followed by another main bottom at .7311.

The main range is .7777 to .7311. Its retracement zone at .7544 to .7599 remains the primary upside target. This week’s rally to .7497 fell well short of the minimum 50% objective.

The intermediate range is 7311 to .7497. Its retracement zone at .7404 to .7382 was tested on Wednesday and earlier today. Buyers are trying to produce a potentially bullish secondary higher bottom. Sellers are trying to drive the market through this zone in an effort to increase the importance of the .7497 main top.

The short-term range is .7497 to .7373. Its retracement zone at .7435 to .7450 is today’s key upside target. A failure in this zone will indicate that sellers are taking control.

Based on the current price at .7414, the direction of the AUD/USD is likely to be determined by trader reaction to the 50% level at .7404.

A sustained move under .7404 will indicate the presence of sellers. The first targets are .7382, .7373 and .7363. The daily chart opens up to the downside under .7363 with .7311 the next target.

A sustained move over .7404 will signal the presence of buyers. This could generate enough upside momentum to challenge the short-term retracement zone at .7435 to .7450.

Watch the price action and read the order flow on a test of .7404 today. Trader reaction to this level will tell us if buyers have returned, or if sellers are increasing pressure.