AUD/USD Forex Technical Analysis – January 12, 2017 Forecast

The AUD/USD is trading sharply higher at the mid-session as investors continue to react to President-elect Donald Trump’s first press conference since November on Wednesday. The Aussie is being supported by buyers who pared back their enthusiasm and hopes the soon-to-be-President would deliver his plans to supercharge the nation’s economic growth.

Since early November, investors have bet big that Trump would charge the U.S. economy through aggressive fiscal spending, tax cuts and relaxed banking regulations. However, the recent price action suggests investors are pulling back some of their bets.

The Australian Dollar was also supported by another strong move in the price of iron ore. China is replenishing its coffers as a shortage of steel has led to greater demand for iron ore, its main ingredient.

Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher, putting the market in a position to take out the December 14 main top at .7524. This will change the main trend to up and set up the market for further upside action because the next main top doesn’t come in until .7777.

The market is far from turning the main trend to down, however, it is in the window of time for a potentially bearish closing price reversal top.

The main range is .7777 to .7159. Its retracement zone is .7468 to .7541. This zone is currently being tested. Trader reaction to this zone will determine the longer-term direction of the market. Look for a bullish tone to develop on a sustained move over .7541 and a bearish tone on a sustained move under .7468.

Forecast

Based on the current price at .7468 and the earlier price action, the direction of the AUD/USD the rest of the session will be determined by trader reaction to the main 50% level at .7468.

A sustained move over .7468 will signal the presence of buyers. This could generate the upside momentum needed to challenge the main top at .7524, the main Fib level at .7541 and the long-term downtrending angle at .7552.

A break back below .7468 will indicate the presence of sellers. This could create enough downside momentum to drive the market into an uptrending angle at .7399.