The Australian Dollar is trading higher on Tuesday, following through to the upside following yesterday’s strong recovery rally. The move in the Aussie is being driven by weakness in the greenback and firmer commodity prices.
Higher gold, crude oil and iron ore all helped underpin the Aussie on Monday. However, the size of yesterday’s move can’t be explained by the fundamentals. Some say it may have reflected position-squaring ahead of the release of the minutes of the last Federal Reserve meeting on Wednesday. Others weren’t certain why the move took place, chalking it up to the will of the traders. Sometimes these things happen in markets.
At 06:26 GMT, the AUD/USD is trading .7137, up 0.0012 or +0.17%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through .7168 will signal a resumption of the trend after 13 days of mostly sideways to lower price action. A trade through .7052 will change the main trend to down.
The minor trend is also up. The trend turned up on Monday after buyers took out a pair of minor tops at .7131 and .7133.
Prices continued to be manipulated by a pair of retracement zones. Currently, the AUD/USD is trading inside a major retracement zone at .7079 to .7153 and on the strong side of another retracement zone at .7105 to .7129.
Daily Technical Forecast
Based on the earlier price action and the current price at .7137, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to a downtrending Gann angle at .7136.
A sustained move over .7136 will indicate the presence of buyers. If this move creates enough upside momentum the look for the rally to extend into a resistance cluster at .7152 to .7153. This is the last potential resistance area before the .7168 main top.
A sustained move under .7136 will signal the presence of sellers. This could lead to a test of the Fibonacci level at .7129. If this price fails as support then look for a potential break into a major support cluster at .7105, .7103 and .7102.
Basically, we’re looking for the upside bias to continue on a move over .7136, and for a downside bias to begin on a sustained move under .7129.