AUD/USD Forex Technical Analysis – Setting Up for Closing Price Reversal Top

The Australian Dollar is trading lower early Tuesday in reaction to a drop in demand for higher-risk assets. Earlier in the session, the Reserve Bank of Australia (RBA) held its cash rate at an all-time low, in a widely expected decision, and said it will maintain its accommodative approach for “as long as it is required.”

At 06:10 GMT, the AUD/USD is trading .6950, down 0.0023 or -0.33%.

In other news, the state of Victoria announced a six-week lockdown across metropolitan Melbourne in a bid to quell the risk of a second wave of infections in Australia. State Premier Daniel Andrews said from midnight Wednesday, people must stay home except for work, essential services, medical treatment or school. He said “significant steps” had to be taken to suppress and contain the virus.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the intraday reversal is threatening to stop the upside momentum.

A trade through .6998 will reaffirm the uptrend. The main trend will change to down on a trade through .6833.

The first short-term range is .7065 to .6777. Its 50% level at .6932 is potential support.

The minor range is .6833 to .6998. Its 50% level at .6916 is another potential downside target.

Since the main trend is up, buyers could come in on the first tests of these levels.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6950, the direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to Monday’s close at .6973.

Bearish Scenario

A sustained move under .6973 will indicate the presence of sellers. If the move creates enough downside momentum then look for the selling to possibly extend into .6933. Watch for buyers on the first test. If the level fails to hold then look for a move into .6916. Buyers again should arrive to defend the uptrend.

If .6916 fails as support then look for a possible acceleration to the downside with the main bottom at .6833 the next target.

Bullish Scenario

Regaining and sustaining a move over .6973 will signal the return of buyers. If this creates enough upside momentum then look for a breakout over .6998. This should lead to an eventual test of a pair of main tops at .7065 and .7082.

Side Notes

A close under .6973 will produce a daily closing price reversal top. If confirmed on Wednesday then look for the start of a minimum 2 to 3 day correction.

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