AUD/USD Forex Technical Analysis – February 23, 2017 Forecast

The AUD/USD is trading lower early Thursday. The U.S. Dollar surprisingly weakened after the release of the Fed minutes which indicated the central bank stands ready to raise interest rates as soon as March if necessary. So we have to conclude the Aussie is feeling pressure from the Reserve Bank of Australia’s minutes that were released earlier in the week. In its minutes, the RBA hinted that interest rates would remain low for a while.

Technical Analysis

The main trend is up according to the daily swing chart. However, upside momentum shifted to down with the formation of the closing price reversal top at .7732 on February 16. A trade through this level will negate the chart pattern and signal a resumption of the uptrend. If the market takes out this top with conviction then look for the rally to possibly extend into the .7777 main top from November 8, 2016.

A trade through .7649 will change the minor trend to down and signal that the Forex pair is getting weaker. The minor range is .7732 to .7649. Its 50% level or pivot is .7691. This zone is controlling the short-term direction of the market. Trading below this level will give the market a downside bias.

The main range is .7511 to .7732. Its retracement zone at .7621 to .7595 is the primary downside target. An uptrending angle passes through this zone at .7606, making it a valid target also. Since the main trend is up, buyers may step in on the first test of this area.

Forecast

Based on the current price at .7667, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the short-term downtrending angle at .7682.

A sustained move under .7682 will indicate the presence of sellers. This could trigger an acceleration to the downside because the next key level doesn’t come in until .7649. If this fails then the next target is the 50% level at .7621.

Holding above .7682 will indicate that buyers may be coming in to defend the uptrend. However, we’re likely to see a labored rally with potential resistance at .7691, .7701, .7707 and .7720. The resistance at .7720 is the last before the .7732 main top.

Watch the price action and read the order flow at .7682 all session on Thursday. This will tell us if buyers have returned or if sellers are exerting more control.