Forex Technical Update
The Reserve Bank of Australia (RBA) lowered its Official Cash Rate (OCR) from 4.50% to 4.25% as expected. This caused a dip in the Aussie against most currencies. The AUD/USD, AUD/JPY and AUD/NZD are all falling toward recent range support levels.
AUD/USD is near 1.0150 low of the recent range. A break below that can push to 1.0075, and then the 1.0020 area near the 200SMA this European session. Otherwise, the market still has bullish bias. However since the RSI dipped below 30 to reflect bearish momentum in the 1H chart, the bullish look returns only if a rally can push the RSI back up above 60. As far as price action, a failed attempt to the upside can be signified by a failure to break back above 1.02. Above 1.0250, we are very likely back to the bullish mode.
The AUD/JPY has also established bearish momentum in the 1H chart. 78.80 is range support. A break below can open up the 200SMA in the short-term, which is near 77.80. A failed bullish attempt would be one that can't break back above 79.50 (near central pivot of the range). A more significant rally to take out the high right before the RBA-reaction would to take out the 79.70 level. Above that, and a push of the RSI (although they might not occur simultaneously), can invalidate the initial reaction of the RBA decision.
The AUD/NZD has been bullish but has somewhat slowed down. We had to look at the 4H chart, and for the size to fit this article, we need to look at it zoomed out, with many more candles, to capture the recent range that has support near 1.3055. For this pair, a break back above 1.3140 will be needed to invalidate the initial reaction. Otherwise, a break below 1.3050, should suggest follow through to this reaction.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources