AUDUSD Forex Forecast – Major Support Still Holding

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AUDUSD has once again bounced off the major support at the .7600 handle, which has kept losses at bay since 2009. A short-term reversal pattern can be seen right on the floor and the pair could be in for another quick rally.

On the 4-hour chart, it can be seen that AUDUSD is bouncing off the .7600 mark with a double bottom formation. The chart pattern is around 200 pips in height, which suggests that a potential rally could last by the same amount.

Stochastic is moving up, indicating that a rally is possible. RSI is also indicating that buyers are in control of price action at the moment and that a test of the neckline around the .7800 handle might take place sooner or later. Note, however, that the 100 SMA has crossed below the 200 SMA and is indicating a potential downtrend continuation.

AUDUSD Forex Fundamentals

The path of least resistance is to the downside, thanks to the Fed’s rate hike prospects and the RBA’s easing bias. Earlier this week, China printed weaker than expected import figures and a lower than expected CPI reading, increasing the odds of further easing from their central bank.

Later this week, Australia will release its employment figures and possibly show another set of weak data. Analysts are expecting to see an increase of 15.2K for May after the economy posted a 2.9K decline in the previous month. Meanwhile, the unemployment rate is expected to hold steady at 6.2%. Weaker than expected results could renew calls for another RBA rate cut, which might push the pair below .7600.

Another event risk for this setup is the US retail sales release, which could show stronger gains for the headline and core figures. If so, the US dollar could enjoy stronger demand on increased rate hike expectations for September, which might be enough to push for a break of .7600.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.