AUD/USD Forex Technical Analysis – Needs to Hold Above .7123 to Sustain Upside Momentum

The Australian Dollar is edging lower early Wednesday on concerns over the spread of the coronavirus locally. Losses are likely being limited by better-than-expected economic data that suggests the economy may be mounting a turnaround.

At 08:46 GMT, the AUD/USD is trading .7156, down 0.0008 or -0.11%. Earlier in the session, the Aussie hit a multi-year high at .7168.

Profit-takers are driving the AUD/USD lower on Wednesday, erasing earlier gains. The selling is being fueled by concerns over the spread of COVID-19 after Victoria revealed 484 new coronavirus infections on Wednesday, which is a single-day record for the nation. The most populous state, NSW, is on “high alert” to keep its hotspots under control.

Earlier in the session, a report showed Australia’s retail sales climbed 2.4% in June as its economy continued to reopen. That follows a record 16.9% surge in the previous month.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was confirmed earlier in the session when buyers took out the previous day’s high.

The main trend will change to down on a move through the last main bottom at .6833. This is highly unlikely, but due to the prolonged move up in terms of price and time, we would not be surprised by the formation of a potentially bearish closing price reversal top.

The minor trend is also up. A trade through .6963 will change the minor trend to down. This will also shift momentum to the downside.

The new minor range is .6963 to .7168. Its retracement zone at .7065 to .7041 is the next downside target and potential support area.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .7156, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to yesterday’s close at .7123.

Bullish Scenario

A sustained move over .7123 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly lead to a retest of the intraday high at .7168. This is a potential trigger point for an acceleration to the upside with the April 17, 2019 main top the next likely upside target.

Bearish Scenario

A sustained move under .7123 will signal the presence of sellers. This move won’t change the trend to down, but it could trigger the start of a 2 to 3 day correction with .7065 to .7041 the next likely downside target.

For a look at all of today’s economic events, check out our economic calendar.