AUD/USD Forex Technical Analysis – Move Through .7182 Confirms Friday’s Closing Price Reversal Top

The Australian Dollar is trading nearly flat as investors await the release of the latest interest rate statement from the Reserve Bank of Australia. The RBA is widely expected to leave its benchmark interest rate unchanged at 1.50%. It is also expected to remain upbeat about the economy, but maintain its neutral policy outlook. The report is due out at 0330 GMT.

At 0237 GMT, the AUD/USD is trading .7210, up 0.0001 or +0.01%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers took out the October 17 main top at .7160. Taking out Friday’s high at .7259 will indicate the buying is getting stronger. If this creates enough upside momentum, the rally could extend into the September 26 main top at .7314.

The trend may be up, but momentum may be getting ready to shift lower due to the formation of the closing price reversal top on Friday. A trade through .7182 will confirm the chart pattern. This won’t change the trend, but it could trigger the start of a 2 to 3 day counter-trend break.

The main range is .7314 to .7020. The AUD/USD is currently trading on the strong side of its retracement zone at .7202 to .7167. This is helping to give it an early upside bias.

The short-term range is .7020 to .7259. If the closing price reversal top is confirmed then look for a potential pullback into its retracement zone at .7139 to .7111.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to the main Fibonacci level at .7202.

A sustained move over .7202 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible test of .7259. Volume is expected to be light because of the U.S. Mid-Term elections so hitting this target could prove to be difficult.

A sustained move under .7202 will signal the presence of sellers. This could trigger a break into the lows at .7182.

Taking out .7182 will confirm the reversal top and create enough downside momentum to challenge the main 50% level at .7167. If this price level fails then the selling to eventually extend into the next retracement area at .7139 to .7111.