The Australian Dollar eked out a small win on Tuesday after giving back most of its earlier gains. The Aussie rallied early in the session after interest rates in Australia were left on hold at a record low of 0.25% and central bank bond purchases were ‘scaled back’.
Increased demand for higher risk assets also helped support the Australian Dollar. This move was fueled after the United States toned down its rhetoric about investigating the cause of the coronavirus in China. Reduced fears of a new trade war between the two economic powerhouses also underpinned prices.
On Tuesday, the AUD/USD settled at .6433, up 0.0008 or +0.13%.
The AUD/USD fell late in the session when U.S. stocks weakened in the final hour of trading after Federal Reserve Vice Chairman Richard Clarida said more policy support will be needed from the central bank and government to support the markets and the economy.
Daily Swing Chart 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 April 30. A trade through .6570 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through .6254.
The minor trend is also up. A trade through .6373 will change the minor trend to down. This will confirm the shift in momentum to down.
The minor range is .6570 to .6373. Its 50% level or pivot at .6472 is minor resistance. This stopped the buying on Tuesday.
The short-term range is .6254 to .6570. Its 50% level at .6412 is support.
The main range is .6685 to .5510. Its retracement zone at .6236 to .6097 is the major support area. This zone is controlling the longer-term direction.
Daily Swing Chart Technical Forecast
Based on Tuesday’s close at .6433, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the 50% level at .6472 and the 50% level at .6412.
A sustained move over .6472 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for the rally to possibly extend into the .6570 main top.
A sustained move under .6412 will signal the presence of sellers. This could trigger a quick break into the minor bottom at .6373. This is a potential trigger point for an acceleration to the downside with the next targets a main bottom at .6254 and a major Fibonacci level at .6236.
This article was originally posted on FX Empire
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