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AUD/USD Forex Technical Analysis – March 27, 2017 Forecast

By:
James Hyerczyk
Published: Mar 25, 2017, 16:47 UTC

The AUD/USD finished slightly lower on Friday, but most of day, the Forex pair was held in a range with investors captivated by the events in Washington.

Australian Dollar

The AUD/USD finished slightly lower on Friday, but most of day, the Forex pair was held in a range with investors captivated by the events in Washington. With the U.S. House of Representative vote on healthcare coming late in the trading session, there was very little time for investors to react fully to the Republicans decision to pull the bill from the floor before an actual vote took place.

The second postponement in two days indicated that the Republicans did not have enough votes to repeal Obamacare and enact their own health care plan.

At the end of the day, investors were left assessing the impact of the failed vote on the future of Trump’s pro-growth agenda. The Whitehouse has already said it will move on to bigger issues such as tax reform.

Traders are going to have to take the week-end to assess the damage, if any, this failed vote has caused for Trump in his efforts to reform taxes, relax banking regulations and increase fiscal spending. These issues involve key promises Trump made during his campaign and after his election. Higher risk assets were pumped up on speculation that if Trump delivered on his promises, it would be good for the economy.

AUDUSD
Daily AUD/USD

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since March 21.

The short-term range is .7490 to .7749. Its retracement zone at .7619 to .7589 is the primary downside target. Trader reaction to a test of this zone will determine the near-term direction of the AUD/USD.

The zone was tested on Friday and we saw a technical bounce to the upside after the market reached its low at .7603.

This zone is critical because buyers are going to try to produce a bullish secondary higher bottom. Bearish counter-trend traders are going to try to drive the market through this zone.

The next major retracement zone target comes in at .7541 to .7468. Inside this zone is the last main bottom at .7490.

Forecast

Based on Friday’s close at .7622, the direction of the AUD/USD on Monday will be determined by trader reaction to the 50% level at .7619.

Holding above .7619 will indicate the presence of buyers. This move could generate enough upside momentum to trigger a strong rally since the next major target doesn’t come in until .7669. This is another potential trigger point for a rally into the next downtrending angle at .7709.

If .7619 fails as support then look for an early break into .7610 and .7589. Selling pressure is expected to increase on a move under .7589 with the next two targets coming in at .7550 and .7541.

An alternative way to trade the AUD/USD on Monday is to focus on the 50% level at .7619 and the 61.8% level at .7589. Assume a bullish tone on a sustained move over .7619 and a bearish tone under .7589.

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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