AUD/USD Facing Wall of Resistance at .7556 to .7617

The Australian Dollar is inching higher early Monday in a tight trading range. Underpinning the currency are higher commodity prices.

Meanwhile, Aussie currency watchers are also looking out to Australia’s budget on Tuesday. Australia’s Treasurer said on Sunday the budget would mark a very significant material improvement to the government’s bottom line.

At 03:24 GMT, the AUD/USD is trading .7520, up 0.0004 or +0.05%. On Friday, the Invesco CurrencyShares Australian Dollar Trust settled at $74.44, down $0.07 or -0.10%.

One possible headwind for the Aussie is the COVID-19 situation in China, after Shanghai said on Sunday it would lockdown the city to carry out COVID-19 testing.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7537 will signal a resumption of the uptrend.

A trade through .7165 will change the main trend to down. This is highly unlikely, but the prolonged move up in terms of price and time has put the AUD/USD inside the window of time for a potentially bearish closing price reversal top.

The new minor range is .7165 to .7537. Its retracement zone at .7351 to .7307 is the nearest support zone.

The short-term range is .6967 to .7537. Additional support is the retracement zone at .7252 to .7185.

Daily Swing Chart Technical Analysis

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7520.

Bullish Scenario

A sustained move over .7520 will indicate the presence of buyers. Taking out this level could trigger a fast rally into .7537.

A trade through .7537 will signal a resumption of the uptrend. This could trigger a rally into a series of main tops at .7556, .7599 and .7617. This “price cluster” could offer strong resistance on the initial test.

Bearish Scenario

A sustained move under .7537 will indicate the presence of sellers. If this creates enough downside momentum, we could see the start of a correction back to the first support zone at .7351 to .7307.

Side Notes

Taking out .7537 then closing below .7520 will form a closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger the start of a minimum 2 to 3 day correction with .7351 the first downside target.