AUD/USD Forex Technical Analysis – Main Trend Up with Enough Momentum to Challenge .7275 – .7341
The choppy Australian Dollar changed its trend to up for a second time this month on Thursday as the recovery rally continued.
The Aussie bottomed earlier in the month on December 3, just slightly above its one-year bottom. Sentiment began to shift when the Reserve Bank of Australia (RBA) signaled it would start tightening in early 2023.
On Thursday, the AUD/USD settled at .7243, up 0.0028 or +0.39%. The Invesco CurrencyShares Australian Dollar Trust ETF settled at $71.86, up $0.23 or +0.32%.
The Reserve Bank of Australia (RBA) is expected to raise interest rates in early 2023, and possibly sooner, according to a Reuters poll of economists, who brought forward their rate hike expectations for the second straight month.
Against a backdrop of rising inflation in Australia and around the world, the RBA is now predicted to lift its cash rate from a record low 0.10% in the first quarter of 2023.
That’s sooner than the second quarter of 2023 forecast in a poll taken almost a month ago, while a survey taken only two months ago there was no consensus for any rate rise in 2023.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up on Thursday when buyers took out the previous main top at .7224. Earlier in the month, the AUD/USD changed trend when it took out .7187, but that rally failed and the trend changed back down when sellers took out .7090, only to find support at .7083.
The price action suggests the first rally was designed to take out the shorts in order to set up the first buy on the subsequent dip.
The turnaround at .7083 produced a secondary higher bottom. It also indicated that new buyers have entered the market.
Traders have chewed through potential resistance levels at .7108, .7182 and .7212, making them new support. This puts the AUD/USD in a position to challenge the retracement zone at .7275 to .7341.
The 50% to 61.8% retracement zone at .7275 to .7341 is controlling the near-term direction of the market.
Look for sellers on the first test of .7275 to .7341. But prepare for an acceleration to the upside if the buying is strong enough to overcome .7341.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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