AUD/USD Forex Technical Analysis Forecast – Rally Stalls after Closing Price Reversal Top Forms

The Australian Dollar is edging higher on Tuesday after failing to follow-through to the downside following yesterday’s potentially bearish closing price reversal top chart pattern. The formation does not indicate a change in trend, but rather that the selling may be greater than the buying at current price levels. If the chart pattern is confirmed, then look for a 2 to 3 day correction.

At 08:33 GMT, the AUD/USD is trading .7368, up 0.0026 or +0.35%.

In other news, the Reserve Bank of Australia (RBA) held rates at near-zero in a widely expected move on Tuesday as easy monetary and fiscal policies propped up the coronavirus-hit economy, fueling demand for homes and boosting construction activity.

In a short post-meeting statement, Governor Philip Lowe sounded optimistic about a recovery as the country has confidently reopened with almost zero new coronavirus cases.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Monday’s closing price reversal top may be an early sign that momentum is getting ready to shift to the downside.

A trade through Monday’s low at .7339 will confirm the chart pattern. This could trigger a minimum break into the minor retracement zone at .7331 to .7313, or it could fuel the start of a 2 to 3 day correction.

A move through .7407 will negate the chart pattern and signal a resumption of the uptrend. The main trend will change to down on a move through .7255.

The minor range is .7255 to .7407. Its retracement zone at .7331 to .7313 is potential support.

The short-term range is .7414 to .6991. Its retracement zone at .7252 to .7202 is the next potential support area.

Since the main trend is up, buyers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to .7339.

Bullish Scenario

A sustained move over .7339 will indicate the presence of buyers. If this is able to generate enough upside momentum, then look for the rally to possibly extend into .7407 to .7414. Taking out .7414 will indicate the buying is getting stronger with .7453 the next likely upside target.

Bearish Scenario

Taking out .7339 will confirm the closing price reversal top. This should lead to a quick test of .7331 to .7313. Buyers could come in on a test of this area.

Look or a break into the support cluster at .7255 to .7252 if .7313 fails as support.