AUD/USD Forex Technical Analysis – Fed Minutes Trigger Whipsaw Response then Rally

The release of the minutes from the Fed’s June monetary policy meeting produced a wicked two-sided move by the AUD/USD

The AUD/USD reached an intraday high on the fifteen-minute chart at .7599 with the release of the minutes. The Forex pair then plunged to .7584 before soaring .7603. The price action suggests traders perceived the minutes as mixed.

Given the two-sided price action, the Forex pair is likely to settle near the middle of the range today.

The whip-saw price action was a result of the minutes showing Fed officials worried about loose policy and ultimately determined to raise interest rates at its June meeting. The Fed also said it plans to unwind its $4.5 trillion balance sheet it accrued while to trying to stimulate the economy during and after the financial crisis. It did not release a timetable for the process, though.

I don’t think investors were too worried about why the Fed raised rates, but the lack of details on how it planned to unwind its balance sheet was likely a major concern for investors. This led to the two-sided trade.

Forecast

The main trend is up according to the daily swing chart. The price action suggests buyers may be coming in a little earlier than expected because of the news. The primary downside target remains .7524 to .7502, however, the AUD/USD may not reach this zone if the buying is strong enough to turn the market higher on Wednesday.

The AUD/USD is also straddling a pair of Gann angles. The downtrending angle comes in at .7592 and the longer-term uptrending angle comes in at .7602 on Wednesday. Trader reaction to these angle at the close could determine the direction of the Forex pair on Thursday.

The angle at .7592 on Wednesday is moving down at a rate of .004 per day from the .7712 main top. It comes in at .7552 on Thursday.

The uptrending angle is moving up .001 per day from the June 2 main bottom at .7372. This angle comes in at .7612 on Thursday.

A close over .7612 could set a bullish tone for Thursday. A close under .7552 could set a bearish tone.