The AUD/USD closed lower on Monday, pressured by weaker commodities and a stronger U.S. Dollar. Early Tuesday, the Forex pair is mounting a slight recovery.
The main trend is up according to the daily swing chart, but upside momentum appears to be slowing. The Forex pair is currently sitting inside a major retracement zone. Trader reaction to this zone should determine the near-term trend of the market.
A trade through .7874 will signal a resumption of the uptrend. A move through .7897 will reaffirm the uptrend. This could launch an acceleration to the upside. The daily chart indicates there is plenty of room to rally with the next potential targets .8102 to .8124.
The main range is .8124 to .7501. Its retracement zone is .7812 to .7886. The AUD/USD is currently sitting inside this zone. Look for the upside bias to continue on a sustained move over .7886 and for a downside bias to begin on a sustained move under .7812.
The short-term range is .7501 to .7874. If sellers come in big under .7812 then we could see an acceleration to the downside with its retracement zone at .7687 to .7643 the next major downside target.
In order to generate the upside momentum needed to continue the rally, a wave of buying volume has to come in to drive the AUD/USD through the wall of resistance at .7874, .7886 and .7897.
If volume comes in below average then look for a sideways trade inside .7812 to .7897.
If sellers take control then look for a possible acceleration to the downside on a sustained move under .7812.
This article was originally posted on FX Empire
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