Computer algorithms are driving the Australian Dollar higher against the U.S. Dollar on Wednesday. Bullish traders appear to be taking advantage of thin-trading conditions with most of the trading community taking the day off because of the New Year’s holiday.
The price behavior suggests traders are still counting on a weaker U.S. Dollar at the start of the New Year as well as economic growth now that trade tensions have eased between the United States and China. It also indicates investors are reducing the chances of a near-term rate cut by the Reserve Bank of Australia (RBA).
At 06:59 GMT, the AUD/USD is trading .7041, up 0.0023 or +0.32%.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out yesterday’s high at .7032.
The main trend will change to down on a trade through .6838. This is highly unlikely, however, due to the prolonged move up in price and time, the AUD/USD is in the window of time for a closing price reversal top.
This chart pattern won’t change the main trend to down, but it will signal the selling is greater than the buying at current price levels. This often leads to a 2 to 3 day break or a 50% to 61.8% correction of the last rally.
The main range is .7082 to .6671. Its retracement zone at .6925 to .6876 is major support. It is controlling the near-term direction of the AUD/USD.
Daily Swing Chart Technical Forecast
Based on the early price action and the current price at .7041, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to yesterday’s close at .7018.
A sustained move over .7018 will indicate the presence of buyers. Taking out the intraday high at .7043 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for the rally to possibly extend into the July 19 main top at .7082.
A sustained move under .7018 will signal the presence of sellers. A close under this level will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction with the first major target the Fibonacci level at .6925.
This article was originally posted on FX Empire
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