audusd potential corrective rally looms ahead of nfp 1848612017

Since our last analysis dated on 04 April 2017, the AUD/USD had declined as expected below the 0.7630/20 intermediate resistance zone and hit the downside targets/supports of 0.7550 and 0.7515. Click here for a recap on our previous report.

Now, let’s us take a look at the latest technical elements ahead of the U.S. nonfarm payrolls data for March that will be released later at 1230 GMT.

Short-term technical outlook on AUD/USD

(Click to enlarge chart)

Key technical elements

• The pair has continued to drop within a minor bearish descending channel in place since 21 March 2017 medium-term swing high. Right now, it is coming close to the lower boundary of the descending channel at 0.7500 and it also confluences with a Fibonacci projection cluster.
• Interestingly from the last minor swing high area of 0.7585 printed on 06 April 2017, the pair has started to evolve within a minor bullish reversal “Descending Wedge” configuration with its lower boundary also coincides with the aforementioned 0.7500 level. The appearance of such configuration suggests that downside momentum of price action has started to abate where a potential rebound may occur soon.
• The hourly short-term Stochastic oscillator has also traced out a bullish divergence signal at its oversold region which also suggests a slowdown on downside momentum of the recent decline seen in price action.
• The significant short-term support now rests at 0.7490 which is defined by the swing low area of 09 March 2017 (that lead to a V sharp rebound) and the former congestion swing high areas of 28 November/13 December 2016.
• The significant short-term resistances stands at 0.7540 (upper boundary of the minor “Descending Wedge” and 0.7575/85 (upper boundary of the descending channel & swing high area of 06 April 2017).

Key levels (1 to 3 days)

Intermediate support: 0.7500

Pivot (key support): 0.7490

Resistances: 0.7540 & 0.7575/85

Next support: 0.7410/7380 (61.8% Fibonacci retracement of the rally from 23 Dec 2016 low to 21 Mar 2017 high)

Conclusion

The AUD/USD is now coming close to an inflection/support zone where it may stage a final push down to test 0.7500/0.7490 before a potential corrective rebound materialises. A break above 0.7540 (upper boundary of the “Descending Wedge”) is likely to open up scope for a further up move to target 0.7575/85 next.

On the other hand, failure to hold above 0.7490 short-term pivotal support is likely to see a further decline towards the next support at 0.7410/7380.

Charts are from eSignal

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