The AUD/USD is trading lower shortly before the U.S. opening and ahead of today’s U.S. Non-Farm Payrolls report. The recent price action suggests that investors are looking for a strong report that is likely to keep the Fed on track to raise rates in December.
The Aussie sold off earlier in the session after taking out a key technical level. The catalyst behind the price action was fueled by dovish comments from a Reserve Bank of Australia official.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The market isn’t close to turning the trend to up, but it is in the window of time for a potentially bullish closing price reversal bottom. This often happens when bearish reports are already priced into the market.
The main range is .7571 to .8124. Its retracement zone is .7848 to .7782. The AUD/USD is currently trading on the weak side of this retracement zone. This opens up the Forex pair for an extension of the break. The next major target is the July 5, 2017 main bottom at .7571.
Based on the current price at .7774 and the earlier price action, the direction of the AUD/USD is likely to be determined by trader reaction to the major Fibonacci level at .7782.
A sustained move under .7782 will indicate the presence of sellers. This could trigger a break into the uptrending angle at .7739.
If .7739 fails as support then look for an acceleration into the next uptrending angle at .7655. This is the last potential support angle before the .7571 main bottom.
A sustained move over .7782 will signal the presence of buyers. If volume increases on this move then we could see an acceleration into the main 50% level at .7848, followed by a downtrending angle at .7862.
Watch the price action and read the order flow at .7782 all session.
This article was originally posted on FX Empire
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