AUD/USD Forex Technical Analysis – Boosted by Position-Squaring Ahead of RBA Announcements

The Australian Dollar is trading higher on Monday after clawing back earlier losses. Shortly after the opening, the Aussie touched a 15-week low as more coronavirus lockdowns internationally darkened the outlook for global growth, though upbeat data at home offered some support.

At 11:24 GMT, the AUD/USD is trading .7038, up 0.0010 or +0.14%.

The price action suggests some traders are squaring positions ahead of Tuesday’s Reserve Bank of Australia (RBA) monetary policy announcements. The RBA has signaled its readiness to act and markets look for a rate cut and a shift to quantitative easing (QE) at a monthly policy meeting on Tuesday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out last week’s low at .7002. The main trend will change to up on a move through the previous main top at .7158.

The main range is .6777 to .7414. The AUD/USD is currently testing its retracement zone at .7096 to .7020. Trader reaction to this area is likely to determine the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the Fibonacci level at .7020.

Bearish Scenario

A sustained move under .7020 will indicate the presence of sellers. This could lead to a retest of the intraday low at .6991, followed by the July 16 main bottom at .6963. This is a potential trigger point for an acceleration into the July 14 main bottom at .6921.

Bullish Scenario

A sustained move over .7020 will signal the presence of buyers. If this generates enough upside momentum then look for a possible spike into the Fibonacci level at .7096.

It’s going to take a lot of buying and short-covering to approach .7096 so we’re more likely to tests a pair of highs at .7072 and .7076.

Side Notes

I don’t think we’re seeing aggressive buying ahead of the RBA announcements and the U.S. presidential election so be prepared for a two-sided, choppy trade.