AUD/USD Forex Technical Analysis – Holding .7414 Sets Up Eventual Test of July 2018 Top at .7484

After several attempts this week, the Australian Dollar has finally crossed to the bullish side of its September 1 top, perhaps generating the upside momentum needed to eventually challenge its July 2018 top.

Successful control of COVID-19 is one factor making the Aussie a more attractive currency. The application of timely fiscal and monetary stimulus is another factor making the Aussie more desirable than the U.S. Dollar. The news that Australia’s economy rebounded more than expected in the third quarter is also driving demand for the currency.

However, one can’t ignore the impact of the weakening U.S. Dollar, which is tumbling as investors bet that more economic stimulus from Washington and the expected start of COVID-19 vaccinations would support higher-yielding currencies.

At 08:29 GMT, the AUD/USD is trading .7427, up 0.0012 or +0.16%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Overtaking the September 1 main top at .7414 reaffirmed the uptrend. The main trend will change to down on a trade through .7255.

Daily Swing Chart Technical Forecast

The nearest support is .7414 since “old tops tend to become new bottoms”. A sustained move over this level will indicate that bullish traders are buying the Aussie with conviction. If this continues to generate enough upside momentum then look for an eventual move into the July 9, 2018 main top at .7484.

A sustained move under .7414 won’t change the main trend to down, but it will indicate the buying is getting weaker or the selling a little stronger. It could also be a sign that the breakout was fueled by buy stops rather than new buyers.

Traders should also watch for a higher-high, lower-close chart pattern. The formation of a closing price reversal top will also be a potentially bearish development.

Keep it simple today. Look for the bullish tone to continue as long as .7414 holds as support.