AUD/USD Forex Technical Analysis – December 6, 2016 Forecast

The AUD/USD is trading lower after the Reserve Bank of Australia kept its benchmark interest rate unchanged at 1.5% at its December meeting. The move was widely expected. The central bank justified its decision to hold rates steady by saying it had already eased monetary policies earlier in the year.

In its monetary policy statement, the RBA highlighted Australia’s labor market statistics while mentioning it may consider adopting a wait-and-see attitude over the near-term.

According to the RBA, “Labor market indicators continue to be somewhat mixed. The unemployment rate has declined this year, although some measures of labor underutilization are little changed. There continues to be considerable variation in employment outcomes across the country. Part-time employment has been growing strongly, but employment growth overall has slowed.”

Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7497 will turn the main trend to up. A move through .7369 will signal a resumption of the downtrend. This is followed closely by the next main bottom target at .7311.

The main range is .7145 to .7777. Its retracement zone is .7461 to .7386. This zone is currently being tested. Trader reaction to this zone will set the longer-term tone of the market in addition to the swing chart.

The short-term range is .7777 to .7311. Its retracement zone at .7544 to .7599 is the primary upside target.

Forecast

Based on the current price at .7461 and the early price action, the direction of the AUD/USD today is likely to be determined by trader reaction to the major 50% level at .7461.

A sustained move over .7461 will signal the presence of buyers. This could trigger the upside momentum to overcome the main top at .7497. This is followed by an uptrending angle at .7531 and .7544. This is another trigger point for an extension into .7577 and .7599.

A sustained move under .7461 will indicate the presence of sellers. The first target is a short-term uptrending angle at .7421. This is followed by the main Fibonacci level at .7386, main bottom at .7369 and another uptrending angle at .7366. This is the last potential support angle before the .7311 main bottom.

Watch the price action and read the order flow at .7461. Trader reaction to this level will tell us if the buying is increasing or if the sellers are regaining control.