The AUD/USD traded mostly lower on Friday after the Reserve Bank of Australia slashed its expectations for future price rises, saying that both inflation and wages are expected “to increase only gradually over time”.
Australian Dollar traders didn’t seem to care about the weaker U.S. Dollar which fell again due to disappointment that the U.S. tax overhaul may be delayed until 2019. Volume was also below average because of the U.S. bank holiday.
Daily Swing Chart Analysis
The main trend is down according to the daily swing chart. A trade through .7729 will change the main trend to up.
The Aussie has been building a support base since hitting a near-term bottom at .7624 on October 27. The recent price action suggests buyers are trying to form a secondary higher bottom. The last potential bottom is the November 7 low at .7627. A trade through .7624 will signal a resumption of the downtrend. This could generate enough downside momentum to challenge the July 5 bottom at .7571.
Daily Retracement Level Analysis
The short-term range is .7624 to .7729. Its 50% level or pivot is .7676. This price is controlling the short-term direction of the market. Trading below this level is helping the AUD/USD to maintain its downward bias.
The main range is .7897 to .7624. If the trend changes to up then look for the rally to extend into its retracement zone at .7760 to .7793. Inside this zone is a major Fibonacci level at .7782.
As long as the AUD/USD holds inside .7624 to .7729, the direction of the Forex pair will be controlled by trader reaction to .7676.
This article was originally posted on FX Empire
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