AUD/USD Forex Technical Analysis – News Driven Market Strengthens Over .7113, Weakens Under .7106

The Australian Dollar is inching higher early Monday following the previous session’s steep sell-off. The price action suggests traders are taking a “wait and see” approach after the currency plunged on Friday in response to reports of a new coronavirus variant. Nonetheless, traders are still anticipating heightened volatility over the near-term as the story develops so look for a possible two-sided trade.

At 01:15 GMT, the AUD/USD is trading .7138, up 0.0016 or +0.23%.

In economic news, Quarterly Company Operating Profits rose 4.0%, beating the 2.7% estimate, but falling short of the previously reported 7.1%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7113 will signal a resumption of the downtrend, while a break through the August 20 main bottom at .7106 will reaffirm the downtrend with .6991 – .6963 the next major target zone.

The first minor range is .7371 to .7113. Its 50% level at .7242 is the nearest resistance level.

The second minor range is .7431 to .7113. It retracement zone is another resistance area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7113 to .7106.

Bullish Scenario

A sustained move over .7113 will indicate the presence of buyers. If this move can create enough near-term momentum then look for the rally to possibly extend into .7242. Since the main trend is down, sellers are likely to come in on the first test of this level.

Overcoming .7242 will indicate the buying is getting stronger, but once again, sellers could stop the rally at .7272 – .7310.

Bearish Scenario

A sustained move under .7106 will signal the presence of sellers. This could trigger the start of an acceleration to the downside with the first target the November 2, 2020 main bottom at .6991, followed by the July 16, 2020 main bottom at .6963.

Side Notes

We’re in a news driven market so be prepared for a volatile two-sided trade.