AUD/USD Forex Technical Analysis – New Higher Bottom Formed at .7706, but Needs to Clear .7826 to Turn Bullish

The Australian Dollar is edging higher on Wednesday, but off its highs as investors expressed concerns over COVID-19 outbreaks in Melbourne and regional Victoria. Nonetheless, the tone is upbeat as investors reacted positively to a surprise announcement from the Reserve Bank of New Zealand (RBNZ) that it might hike interest rates as early as September next year.

At 07:47 GMT, the AUD/USD is trading .7780, up 0.0026 or +0.34%.

In economic news, the value of total construction work done in Australia was up a seasonally adjusted 2.4 percent on quarter in the first three months of 2021, the Australian Bureau of Statistics said on Wednesday – coming in at A$51.975 billion. That beat expectations for an increase of 2.2 percent following the upwardly revised 0.4 percent increase in the three months prior (originally -0.9 percent). On a yearly basis, the value of total construction work fell 1.1 percent.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7814 will signal a resumption of the uptrend. The main trend will change to down on a move through .7706.

The main range is .8007 to .7532. The AUD/USD is currently testing its retracement zone at .7770 to .7826. This zone has proved to be solid resistance all month.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is support. This zone stopped the selling on Monday at .7706.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main 50% level at .7769.

Bullish Scenario

A sustained move over .7770 will indicate the presence of buyers. If this move creates enough upside momentum then look for a drive into the main top at .7814, followed closely by the main Fibonacci level at .7826. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7769 will signal the presence of sellers. The first downside target is a minor pivot at .7751, followed by the short-term 50% level at .7711 and the main bottom at .7706.

Side Notes

Despite the two day rally, the AUD/USD is not out of the woods yet. The Forex pair still has to clear .7826 in order to give it a chance to breakout to the upside. Trading conditions are a little more positive, however, with the formation of a second higher bottom at .7706. However, we all know that it takes a series of higher bottoms and higher tops to generate a strong uptrend. We’re still waiting for the next higher top.

For a look at all of today’s economic events, check out our economic calendar.