The Australian Dollar is under pressure on Wednesday due to the announcement of fresh tariffs on China by the United States. Sellers hit the Aussie hard on the thought that the Australian economy will weaken since it is a major trading partner with China.
At 1106 GMT, the AUD/USD is trading .7395, down 0.0066 or -0.89%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum is trending higher. Despite a rally to a three-week high earlier in the week, the AUD/USD never crossed a swing top so it never changed the trend to up.
The minor trend is up. This is why momentum is trending higher. A trade through .7361 will change the minor trend to down. This will also shift momentum to the downside.
The short-term range is .7310 to .7484. The AUD/USD is currently testing its retracement zone at .7397 to .7376. This zone is very critical to the chart pattern. Aggressive counter-trend buyers are likely to try to form a secondary higher bottom on a test of this zone. Sellers are going to try to drive the market through this zone in an effort to make .7484 a new main top.
The main range is .7677 to .7310. Its retracement zone at .7494 to .7537 is the primary upside target and resistance zone.
Daily Technical Forecast
Based on the current price at .7395, the direction of the AUD/USD the rest of the day is likely to be determined by trader reaction to the short-term 50% level at .7397.
A sustained move over .7397 will indicate the return of buyers. If this generates enough upside momentum then look for a test of the downtrending Gann angle at .7427. Overcoming this angle could drive the Aussie into an uptrending Gann angle at .7450. Crossing to the strong side of this angle will put the market in a position to challenge .7484, followed closely by .7494.
A sustained move under .7397 will signal the presence of sellers. This could lead to a retest of the support cluster at .7380 to .7376. This area provided support earlier in the session.
The trigger point for an acceleration to the downside is .7376. Taking out this level could drive the AUD/USD into the uptrending Gann angle at .7345. This is the last potential support angle before the .7310 main bottom.
Watch the price action and read the order flow at .7397 all day. Trader reaction to this level will tell us if the bullish traders are stepping in to stop the price slide.
This article was originally posted on FX Empire
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