AUD/USD Forex Technical Analysis – June 3, 2014 Forecast

After the two-day spike rally stalled inside a short-term retracement zone at .9308 to .9332, the AUD/USD broke sharply on Monday, putting the Forex pair in a position to do some damage to the downside.

Although the trend turned up last week when the market traded through .9276, yesterday’s weak close has the market poised for a break down under the last swing bottom at .9210. A trade through this price will turn the main trend back to down if the selling momentum continues.

Standing in the way of an all-out assault to the downside are three 50% levels that played a significant role throughout May when the AUD/USD was threatening a similar break. The levels are .9227, 9191 and .9175. Also providing support are three swing bottoms at .9210, .9208 and .9201. A trade through .9210 will turn the main trend to down on the daily chart, but taking out .9201 is likely to trigger the next acceleration to the downside.

Besides the previously mentioned horizontal support levels, the AUD/USD is also in a position to test an uptrending angle from the .8890 bottom at .9220. This angle has given the market direction since the bottom was formed on March 3, or 66 trading sessions. Taking it out with conviction will send a signal that sentiment is shifting to the downside. It may also give the market enough momentum to challenge the uptrending angle from the .8659 bottom at .9119.

On the upside, the nearest resistance angle drops in at .9268. This is followed by a new pivot price at .9278. These levels may be tested in order to establish a new secondary lower top.

In summary, the rejection of the retracement zone at .9308 to .9332 is a sign that there is still a strong selling presence in the market. How traders react to the uptrending angle at .9220 will likely set the tone of the market today. A sharp break through this angle will put the market in a position to test the three bottoms at .9210, .9208 and .9201. Once these prices fail, the main trend will turn to down on the daily chart and further downside pressure is likely to be exerted.