AUD/USD Forex Technical Analysis – Closing Price Reversal Top Indicates Start of Short-Term Correction

Investors are using the confusion over Brexit as an excuse to book profits in the Australian Dollar after the currency ran into a wall of resistance earlier in the week after touching its highest level since September 13. The rally also stalled just short of the September 12 major top at .6895.

Trade talk progress between the U.S. and China and expectations the Reserve Bank of Australia (RBA) will pass on a November rate cut have driven the Aussie higher since the first of October, however, worries over a slowdown in the Australian economy and forecasts calling for the cash market rate to fall to 0.50% early next year could trigger renewed selling pressure.

At 13:15 GMT, the AUD/USD is trading .6846, down 0.0011 or -0.16%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Tuesday’s closing price reversal top at .6883 and today’s subsequent confirmation has shifted momentum to the downside. This could trigger the start of a 2 to 3 day correction. A trade through .6883 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is .7082 to .6671. Its retracement zone at .6877 to .6925 is major resistance. This zone stopped the rally on Tuesday at .6883. It’s also controlling the near-term direction of the AUD/USD.

The minor range is .6724 to .6883. Its 50% level or pivot at .6803 is the first downside target.

Daily Swing Chart Technical Forecast

If the downside momentum continues then look for the selling to extend over the near-term into .6803. Since the main trend is up, buyers could come in on a test of this level.

A slowdown in the momentum could trigger a short-covering rally with the first upside target .6859. This is followed by .6877 and .6883.

Over the near-term, we’re going to see a break into at least .6803, or a breakout over .6883.