AUD/USD Forex Technical Analysis – Trader Reaction to .7848 Will Set the Tone Today

The AUD/USD finished slightly lower on Tuesday but the Forex pair was able to claw back from early session weakness. The market was pressured by dovish Reserve Bank of Australia minutes. The minutes showed the RBA was in no hurry to lift rates which was no surprise. Going forward, the direction of the Aussie is likely to be determined by the direction of U.S. Treasury yields. Rising government debt yields will make the U.S. Dollar a more attractive investment.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the October 6 bottom at .7733.

The major range is .7571 to .8124. Its retracement zone is .7848 to .7782. The AUD/USD has been straddling this zone for about three weeks. Trader reaction to this zone is likely to determine the longer-term direction of the market.

The short-term range is .7733 to .7897. Its retracement zone at .7815 to .7796 falls inside the major retracement zone. The upper or 50% level of the range at .7815 provided support on Tuesday.

The main range is .8102 to .7733. Its retracement zone at .7917 to .7961 is the primary upside target.

Daily Forecast

Based on Tuesday’s close at .7851, the direction of the AUD/USD early Wednesday is likely to be determined by trader reaction to the major 50% level at .7848.

A sustained move over .7848 will indicate the presence of buyers. If this generates enough upside momentum then we could see an eventual challenge of last week’s high at .7897 and the main 50% level at .7917.

A sustained move under .7847 will signal the presence of sellers. This could trigger a labored break with potential targets at .7815, .7796 and .7782.

Early Wednesday, watch the price action and read the order flow at .7848. Trader reaction to this level will tell us if the buyers or sellers are in control.