Yahoo Finance AUD/USD Forex Technical Analysis – Chart Pattern Suggests Normal Retracement into .7627 to .7662 is Likely
The Australian Dollar is trading higher on Wednesday as traders attempt to close higher for a third straight session. Helping to generate some of the upside momentum are lower Treasury yields and increased demand for riskier assets.
U.S. Treasury yields dipped slightly overnight as investors continued to digest Federal Reserve Chair Jerome Powell’s bullish comments on economic recovery in a testimony to Congress Tuesday afternoon.
At 08:46 GMT, the AUD/USD is trading .7570, up 0.0014 or +0.19%.
The Fed Chair reiterated to Congress that the central bank will not raise interest rates until there are signs of a “broad and inclusive” recovery in the job market and economy.
“We will not raise interest rates preemptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances,” Powell said in a hearing before a U.S. House of Representatives panel.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of the closing price reversal bottom on June 21.
Taking out .7477 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a trade through .7776. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of its last sell-off.
The major support is a retracement zone at .7499 to .7379. This zone stopped the selling at .7477 on June 21. This zone is also controlling the near-term direction of the AUD/USD.
The short-term range is .7776 to .7477. Its retracement zone at .7627 to .7662 is the next upside target area.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to .7525.
Bearish Scenario
A sustained move under .7525 will indicate the presence of sellers. This could trigger a further break into the main 50% level at .7499, followed by the main bottom at .7477 and the December 21, 2020 main bottom at .7462.
Bullish Scenario
A sustained move over .7525 will signal the presence of buyers. If this move continues to generate enough upside momentum then look for the rally to possibly extend into the short-term retracement zone at .7627 to .7662 over the near-term.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
