AUD/USD Forex Technical Analysis – Main Trend Down, but Minor Reversal Bottom Forming

The Australian Dollar is trading higher at the mid-session after shrugging off an earlier loss. The move is likely being fueled by short-covering and position-squaring ahead of Wednesday’s U.S. consumer inflation (CPI) report. Counter-trend buyers also came in as the market neared the July 21 bottom at .7290.

At 15:22 GMT, the AUD/USD is trading .7346, up 0.0017 or +0.23%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out the July 28 main bottom at .7317. A move through .7427 will change the main trend to up.

The short-term range is .7290 to .7427. The AUD/USD is currently testing its 50% level at .7352.

Additional resistance levels are lined up at .7379, .7397 and .7422.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD into the close on Tuesday will likely be determined by trader reaction to the 50% level at .7352.

Bearish Scenario

A sustained move under .7352 will indicate the presence of sellers. If this creates enough late session downside momentum then look for the selling to possibly extend into the intraday low at .7316. Taking out this level will indicate the selling pressure is getting stronger with .7290 the next likely target.

Bullish Scenario

A sustained move over .7352 will signal the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into .7379. Since the main trend is down, sellers are likely to show up on a test of this level.