The Australian Dollar is edging higher on Wednesday despite a weaker than expected report on consumer sentiment. Optimistic comments from Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle are likely the catalysts underpinning prices.
Wednesday’s survey showed the Melbourne Institute and Westpac Bank index of consumer sentiment fell 3.8% in March, more than reversing February’s 2.3% bounce.
Meanwhile, RBA Deputy Governor Guy Debelle said a mix of fiscal and monetary policy will help the economy to navigate through this difficult period.
At 09:34 GMT, the AUD/USD is trading .6531, up 0.0031 or +0.47%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6307 will signal a resumption of the downtrend. The main trend will change to up on a move through the last swing top at .6685.
The price action suggests that investors are still trying to digest Monday’s extremely wide range of .6685 to .6307. For three sessions, the AUD/USD has been straddling its retracement zone at .6496 to .6541. Inside this zone is a pair of downtrending Gann angles at .6524 and .6532.
The tight trading range suggests investor indecision and impending volatility.
The main range is .7032 to .6307. Its retracement zone at .6669 to .6755 is the primary upside target.
Daily Technical Forecast
Based on the early price action and the current price at .6531, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the short-term retracement zone at .6496 to .6541.
A sustained move under .6496 will indicate the presence of sellers. This could trigger the start of a steep drop with the next target the multi-year low at .6307.
A sustained move over .6541 will signal the presence of buyers. If this creates enough upside momentum then look for a potential acceleration to the upside with the next potential target the downtrending Gann angle at .6649.
The chart pattern suggests something big is going to happen. However, I’m not sure of the direction and the catalyst. Just start preparing for a breakout in either direction. Make sure you have volume on your side. These types of breakouts tend to fail when volume is below average.