Yahoo Finance AUD/USD Forex Technical Analysis – Watch for Closing Price Reversal Bottom After RBA Minutes
The Australian Dollar is trading flat ahead of the release of the Reserve Bank of Australia (RBA) minutes from its June 3 monetary policy meeting. At that meeting, the Board decided to lower the cash rate by 25 basis points to 1.25 percent. The Board made this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.
At 0:41 GMT, the AUD/USD is trading .6852, down 0.0001 or 0.01%.
Traders will be looking at the minutes for clues about the timing of future rate cuts. Based on the current six-day sell-off, traders are betting on a July rate cut. This assessment is being supported by last week’s disappointing Employment Rate report, which came in at 5.2, higher than the 5.1 forecast.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers took out the .6864 main bottom.
The main trend will change to up on a trade through .7022. This is highly unlikely, but the AUD/USD begins today’s trading session inside the window of time for a closing price reversal bottom. If confirmed, this chart pattern could trigger the start of a 2 to 3 day counter-trend rally.
The nearest upside target is the Fibonacci level at .6967.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to Monday’s low at .6848.
Bullish Scenario
A sustained move over .6848 will indicate the presence of buyers. Taking out Monday’s high at .6885 will make .6848 a new minor bottom. The move could trigger a strong short-covering rally.
Bearish Scenario
A sustained move under .6848 will signal the presence of sellers. If this move generates enough downside momentum then we could see a steep plunge towards the January 3 bottom at .6764.
Closing Price Reversal Bottom Set-up
Taking out .6848 then turning higher for the session will put the AUD/USD in a position to post a potentially bullish closing price reversal bottom. This will indicate the buying is greater than the selling at current price levels. If confirmed, this could lead to a 2 to 3 day short-covering rally.
Traders will also be positioning themselves ahead of the Federal Reserve monetary policy and interest rate decisions on Wednesday.
This article was originally posted on FX Empire
