AUD/USD Starts Session in Window of Time for Short-Term Top

The Australian Dollar is edging lower early Thursday after hitting its highest level since November 2 the previous session. The Aussie was boosted by higher commodity prices including crude oil and gold.

The war in Ukraine also exerted a positive influence on the currency due to strong demand for Liquefied Natural Gas (LNG) and coal. Traders are also saying the possibility of an improvement in the Chinese economy is benefitting the Australian Dollar.

At 03:29 GMT, the AUD/USD is trading .7485, down 0.0014 or -0.19%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $74.33, up $0.29 or +0.39%.

A drop in U.S. Treasury yields also helped support the Australian Dollar. Early in the session on Wednesday the benchmark 10-year U.S. Treasury yield notched a fresh multiyear high before cutting gains into the close.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out the November 4, 2021 main top at .7471. A move through yesterday’s high at .7507 will signal a resumption of the uptrend.

A move through .7165 will change the main trend to down. This is highly unlikely, but since the AUD/USD is up seven sessions from its last main bottom, it starts today’s session inside the window of time for a potentially bearish closing price reversal top.

The first potential support is the old top at .7471. This is followed by a support cluster at .7336 – .7331.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7499.

Bullish Scenario

A sustained move over .7499 will indicate the presence of buyers. Taking out .7507 will indicate the buying is getting stronger. If this picks up enough upside momentum then look for a possible acceleration into the October 28, 2021 main top at .755

Bearish Scenario

A sustained move under .7499 will signal the presence of sellers. The first target is the old top at .7471. Taking out this level will be a sign of weakness. It could even trigger an acceleration to the downside since the nearest support is .7336 – .7331.

Side Notes

Taking out .7507 then closing below .7499 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.