AUD/USD Forex Technical Analysis – Pivot at .7101 Potential Trigger Point for Upside Breakout

The Australian Dollar closed higher on Tuesday after clawing back earlier losses. The currency was pressured early in the session by a sharp sell-off in China’s equity markets and further driven by a steep drop in U.S. equity indexes. A huge recovery in the U.S. stock market helped fuel an intraday short-covering rally by the Aussie Dollar, leading to the higher close.

On Tuesday, the AUD/USD settled at .7085, up 0.0003 or +0.05%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7042 will signal a resumption of the downtrend. The next major downside target is the February 9 main bottom at .6973.  A move through .7160 will change the main trend to up.

Tuesday’s closing price reversal bottom suggests the buying may be greater than the selling at current price levels. A trade through .7092 will confirm the reversal bottom. This won’t change the trend, but it will shift momentum to the upside.

The short-term range is .7042 to .7160. Its 50% level or pivot at .7160 is the first upside target. This level is controlling the short-term direction of the Forex pair.

The main range is .7314 to .7042. If the trend changes to up then its retracement zone at .7178 to .7210 will become the primary upside target.

Daily Swing Chart Technical Forecast

Based on Tuesday’s close at .7085, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to yesterday’s high at .7091.

Taking out .7091 and sustaining the move will indicate the presence of buyers. This could trigger a move into the short-term pivot at .7101. This level is a potential trigger point for an acceleration to the upside with near-term targets coming in at .7160 and .7178.

The inability to sustain a move over .7091 will signal the presence of sellers. This could trigger a pullback into yesterday’s low at .7055. Taking out this level will indicate the selling is getting stronger with potential targets coming in at .7044 and .7042.

If .7042 is taken out with conviction then look for another acceleration to the downside with the next potential target the February 9, 2016 main bottom at .6973.