AUD/USD Forex Technical Analysis – Major Support Zone at .7966 to .7936 Controlling Direction

The AUD/USD is posting a wild, two-sided trade on Tuesday as investors react to the Reserve Bank of Australia’s decision to leave interest rates unchanged, and the threat of further nuclear weapons tests by North Korea. Aussie Dollar traders also reacted to key Fed speeches as the yield on the benchmark 10-year Treasury Note fell below 2.10 percent. The yield on the 30-year Treasury Bond was down to 2.696 percent.

The lower Treasury yields were supportive for the AUD/USD, but the drop in demand for higher-risk assets was bearish. Early Wednesday, Aussie Dollar traders will get the opportunity to react to the latest GDP data from Australia. It’s expected to show a 0.8% quarterly rise.

 

Technical Analysis

The main trend is up according to the daily swing chart. It was reaffirmed early Tuesday when buyers took out the previous main top at .7995. The next major upside target is the July 27 main top at .8065.

The main range is .8065 to .7807. Its retracement zone is .7966 to .7936. The AUD/USD tested this zone early in the session. It should be considered major support. If it fails to hold then investor sentiment is likely to shift to the downside.

Inside the retracement zone is a pair of uptrending angles at .7957 and .7946. Both of these angles should be considered valid downside targets. They provided support early in the session.

Based on the current price at .7982, the nearest resistance angle drops in at .7995. Earlier on Tuesday, the market made its intraday high near a cluster of Gann angles at .8026 to .8030.

Basically, look for an upside bias as long as the AUD/USD remains above the retracement zone at .7966 to .7936. The first sign of weakness will be a sustained move under .7966. A sustained move under .7936 will indicate a shift in investor sentiment and that the selling pressure is increasing.

Look for increased volatility with the release of the GDP data at 0100 GDP.