In This Article:
The Australian Dollar is trading slightly higher early Tuesday on relatively light volume and calm trading conditions. There were no new developments over U.S.-China trade relations. However, there was talk that Chinese investors are anticipating further stimulus from the government to help prop up the economy.
The Forex pair is currently trading inside Monday’s trading range, which suggests investor indecision and impending volatility. Sentiment shifted to the upside late last week when the U.S. reported weaker-than-expected manufacturing PMI data. Aussie traders scrambled to reduce long dollar positions as U.S. Treasury yields plunged in reaction to the news and the increasing possibility of a Federal Reserve rate cut later in the year.
Going forward, the Aussie Dollar is going to be more sensitive to U.S. economic reports especially when they have to do with economic growth, jobs and inflation.
At 06:00 GMT, the AUD/USD is trading .6929, up 0.0015 or +0.17%.
Daily Technical Analysis
The main trend is down according to the daily swing chart, however, momentum has shifted to the upside. A trade through .6864 will signal a resumption of the downtrend.
The minor trend is up. It turned up on Monday when buyers took out the minor top at .6935. This move also led to the shift in momentum to the upside.
The minor range is .6864 to .6939. Its 50% level or pivot at .6901 is new short-term support. Holding above this level will help maintain the developing upside bias.
The next resistance is a Fibonacci level at .6967.
Daily Technical Forecast
Based on the early trade, the direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to the downtrending Gann angle at .6916.
Bullish Scenario
A sustained move over .6916 will indicate the presence of buyers. Taking out yesterday’s high at .6939 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to continue into .6967.
Bearish Scenario
A sustained move under .6916 will signal the presence of sellers. This could trigger a break into the minor pivot at .6901, followed closely by the long-term uptrending Gann angle at .6893. If this angle fails as support then look for the selling to possibly extend into the pair of bottoms at .6864.
This article was originally posted on FX Empire