The AUD/USD continued to forge higher on Thursday after two days of consolidation. The Forex pair held near multi-week highs as bullish investors continued to bet on increasing appetite for risk and higher commodity prices. Traders seemed to take Wednesday’s somewhat hawkish Fed minutes in stride.
The main trend is up according to the daily swing chart. The rally has been strengthening since buyers took out the last main top at .7729 on December 27. The next target is the main top at .7897. This is an important top because it is the last major resistance before the pair of tops at .8102 and .8124.
The daily chart indicates there is plenty of room to the upside over .7897, but the buyers are going to have to keep coming in to sustain the move. And this is a concern because the Fed is going to raise rates and the Reserve Bank of Australia is not.
The main range is .8124 to .7501. Its retracement zone is .7812 to .7886. This zone is currently being tested. Trader reaction to this zone will determine the longer-term direction of the AUD/USD.
Taking out the upper or Fibonacci level at .7886 and the October 13 main top .7897 will indicate the buying is getting stronger. This is a possible launching area for an acceleration to the upside.
A failure to overcome .7886 to .7897 will signal the presence of sellers. This could lead to a pullback into the 50% level at .7812. If this level fails as support then look for a possible acceleration to the downside. The daily chart is also wide open under this level with the next major support coming in at .7641.
The AUD/USD is currently testing a major retracement area. Trader reaction to this zone will determine the next major move for the currency pair. A sustained move over .7897 will continue the upside bias. A sustained move under .7812 will signal the return of sellers.
This article was originally posted on FX Empire
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