AUD/USD Forex Technical Analysis – Reverses Down on Bullish U.S. Economic Data

After spiking up to .7995 in reaction to increased demand for higher risk assets, the AUD/USD broke sharply to turn lower for the session. The catalyst for the sell-off was the stronger-than-expected U.S. economic data which drove up the odds of a Fed rate hike later in the year. This news drove up U.S. Treasury yields, making the U.S. Dollar a more attractive investment.

Technical Analysis

The main trend is up according to the daily swing chart. However, the price action suggests that momentum may be shifting to the downside.

The session began today with the AUD/USD up four days from its recent swing bottom at .7866 and up eleven days from the .7807 main bottom on August 15. This puts the Forex pair in the window of time for a potentially bearish closing price reversal top.

We’ve already had a prolonged move in terms of price and time and a higher-high today so a close below yesterday’s close at .7952, a close below the opening at .7956 and a close below today’s mid-point should produce a closing price reversal top.

The main range is .8065 to .7807. Its retracement zone is .7936 to .7968. Early in the session, the AUD/USD crossed to the strong side of this zone, putting it in a bullish position. However, the strong intraday selling drove the Forex pair to the weak side of the zone, putting it in a bearish position.

The short-term range is .7807 to .7995. Its retracement zone at .7901 to .7879 is the primary downside target.

Forecast

Based on the current price action, resistance is the main 50% level at .7936, the main Fibonacci level at .7968, today’s intraday high at .7995 and a downtrending angle at .8185.

Downside targets include a pair of uptrending angles at .7917 and .7906. They are followed by the short-term 50% level at .7901 and the short-term Fibonacci level at .7879.

A trade through .7866 will change the main trend to down.

Later today, President Trump is expected to announce his tax reform plan. If well received, this could send the U.S. Dollar higher which would put further pressure on the Australian Dollar.