AUDUSD Forex Forecast – Testing Ascending Channel Support

AUDUSD Forex Forecast - Testing Ascending Channel Support

AUDUSD Forex Forecast - Testing Ascending Channel Support

AUDUSD could be due for a bounce since price is testing a key support area visible on its 1-hour and 4-hour charts. Price is finding a floor around the bottom of the ascending channel around the .7700 major psychological support and might climb back to the resistance at .7850 to .7900.

Stochastic is already indicating oversold conditions, confirming that a bounce is likely. Similarly, RSI is in the oversold area and also suggesting that bulls could push prices back up.

Meanwhile, the short-term 100 SMA is moving above the long-term 200 SMA on the 1-hour chart, also supporting the ongoing uptrend. However, a downward crossover might be a sign that a breakout is set to take place and mark the start of a selloff.

AUDUSD Fundamental Factors

Earlier today, China reported a small pickup in its HSBC flash manufacturing PMI for June. The reading climbed from 49.2 to 49.6, reflecting a smaller industry contraction. However, data from Australia came in mostly weaker than expected, as the CB leading index showed a 0.3% decline while the quarterly HPI fell short of expectations.

Risk aversion also seems to be dragging the higher-yielding commodity currencies down, as traders are starting to entertain the idea of a Greek debt default or even a Grexit. There has been no agreement made in the emergency meeting yesterday and it seems that neither the Greek government nor its creditors are willing to compromise.

In terms of economic data, the US is set to print its durable goods orders data today and a 0.6% uptick in the core figure is eyed. The headline report might show a 0.6% decline, though. Still, stronger than expected data could renew expectations of a rate hike for September and give the dollar an additional boost against its counterparts. A break below the channel support could mean a longer-term downtrend for AUDUSD.

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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.