The AUD/USD is trading slightly better shortly before the U.S. opening. The Forex pair is posting an inside move which suggests investor indecision and impending volatility. Traders could be waiting for the release of the European Central Bank’s interest rate decision and monetary policy statement before making their next move.
At 0954 GMT, the AUD/USD is trading .7571, up 0.0007 or +0.10%.
Traders could also be waiting for the next move in U.S. Treasury yields. They could also be taking a break ahead of today’s U.S. Durable Goods report or Friday’s U.S. GDP report.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .7551 will signal a resumption of the downtrend. The next downside target is the December 8, 2017 main bottom at .7501.
The AUD/USD is down five days from its last swing top. Usually we get a reversal bottom between 7 to 10 days. However, due to the size of the current break, we’re going to be watching for an earlier than expected reversal.
Daily Technical Forecast
The first rule of trading is “keep the charts simple”. There is no need for any fancy oscillators, indicators or moving averages at this time. Just watch the price action and read the order flow at .7551 today.
If the market is bearish, sellers are going to drive the AUD/USD through .7551 without looking back with .7501 the next target.
If the market is bullish, buyers are going to hold the AUD/USD above .7551. This could scare the weaker shorts enough to trigger a short-covering rally into a steep downtrending Gann angle at .7612.
Since the main trend is down, we could see a technical bounce on the first test of this angle, but don’t be surprised by a breakout to the upside if buyers take out this angle with conviction.
The third scenario is a little more complicated. Sellers could take out .7551 then buyers could come in and drive the AUD/USD back over yesterday’s close at .7564. This would put the Forex pair in a position to post a potentially bullish closing price reversal bottom.