The Australian Dollar is trading slightly higher early Wednesday. Some of the move is being generated by friendly domestic data, some by a surprise announcement by the Reserve Bank of New Zealand (RBNZ) that triggered a huge short-covering rally in the Kiwi.
In Australia, Westpac Consumer Sentiment came at 4.5%, higher than the previously reported -5.5%. The quarterly Wage Price Index was reported at 0.5%, matching the estimate. The RBNZ left its Official Cash Rate (OCR) at 1.0%. Going into the central bank’s policy meeting, investors had priced in about at 64% chance of a rate cut.
At 01:54 GMT, the AUD/USD is trading .6843, up 0.0001 or +0.01%.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on October 31 at .6930.
A trade through .6930 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down if sellers take out the main bottom at .6809.
The main range is .6671 to .6930. If the trend changes to down then its retracement zone at .6800 to .6770 will become the primary downside target.
The short-term range is .6809 to .6930. Its retracement zone at .6855 to .6870 is potential resistance.
The major resistance zone is .6877 to .6925. It stopped the rally on October 31 at .6930.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at .6840.
A sustained move under .6840 will indicate the presence of sellers. This could trigger a break into a pair of uptrending Gann angles at .6824 and .6821. Since the main trend is up, buyers could come in on a test of these angles.
If .6821 fails as support then look for the selling to possibly extend into the main bottom at .6809, followed by the main 50% level at .6800.
A sustained move over .6840 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the short-term Fibonacci level at .6855.
Overcoming .6855 will indicate the buying is getting stronger. This could trigger rallies into 50% levels at .6870 and .6877, followed by a downtrending Gann angle at .6885.
Nine days down puts AUD/USD in window of time for closing price reversal bottom. Watch trader reaction to Tuesday’s close at .6841.
This article was originally posted on FX Empire
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