AUD/USD Forex Technical Analysis – December 7, 2016 Forecast

The AUD/USD is under pressure on Wednesday. Traders are reacting to the extremely disappointing quarterly GDP report. It showed Australia’s economy contracted in the third quarter for the first time since 2011, as international trade and private capital formation detracted from growth.

According to the National Statistics Bureau, Gross Domestic Product (GDP) declined at a seasonally adjusted 0.5% in the third quarter. Compared to a year ago, the economy grew just 1.8%. Economists in a median estimate forecast quarterly growth of 0.3%, which would have translated into a year-over-year gain of 2.5%.

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 trade through .7369 will signal a resumption of the selling pressure. This is followed by a main bottom at .7311.

The main range is .7777 to .7311. Its retracement zone at .7544 to .7599 is the primary upside target. We could see renewed selling on the first test of this zone.

The major range is .7145 to .7777. Its retracement zone is .7461 to .7386. This zone is controlling the longer-term direction of the market. Currently, the Aussie is trading inside this zone, straddling the upper or 50% level at .7461.

Forecast

Based on the current price at .7436 and the earlier price action, the direction of the AUD/USD today will be determined by trader reaction to the short-term uptrending angle at .7431.

A sustained move over .7431 will indicate the presence of buyers. This could generate enough upside momentum to challenge the major 50% level at .7461. This is also the trigger point for an acceleration to the upside.

Overcoming .7497 will change the main trend to up and it could trigger an acceleration into the 50% level at .7544.

A sustained move under .7431 will signal the presence of sellers. This could trigger a steep break with the next targets the major Fibonacci level at .7386, an uptrending angle at .7371 and the main bottom at .7369.

The price cluster at .7371 to .7369 is the last potential support area before the .7311 main bottom.

Watch the price action and read the order flow at .7431 the rest of the session. Trader reaction to this angle will tell us if the buyers have returned, or if the sellers are increasing pressure.