AUD/USD Forex Technical Analysis – Setup for Volatile Reaction to RBA Rate Decision

The Australian Dollar spent most of the session under pressure on Monday ahead of the Reserve Bank of Australia monetary policy meeting. The RBA is widely expected to leave its benchmark interest rate unchanged. We could see a volatile reaction if the central bank acknowledges a strengthening economy or if it tries to talk down the value of the currency.

Before the RBA statement, investors will get the opportunity to react to the latest data on Australian Retail Sales.

Technical Analysis

The main trend is up according to the daily swing chart. However, Monday’s lower-low helped turn .7712 into a new minor top.

A trade through .7712 will reaffirm both the minor and main trends. This move will also make .7644 a new minor bottom. It could also create enough upside momentum to trigger a test of the November 8, 2016 main top at .7777.

A trade through .7644 will change .7712 into a new main top.

The main range is .7372 to .7712. If a top does develop then look for an eventual pullback into its retracement zone at .7542 to .7502.

Forecast

Monday’s price action has put the AUD/USD in a position to move in either direction which suggests investor uncertainty. Investors are obviously waiting for the RBA announcement.

If the RBA announcement is bullish then buyers will try to take out .7712. This could trigger a surge towards .7777 then an uptrending angle at .7792. Overtaking the angle will put the Aussie in an extremely bullish position.

If the RBA announcement is bearish then sellers will try to drive the Australian Dollar into the nearest support angle at .7582. If this angle fails as support then we could see an eventual break into its 50% level at .7542.