AUD/USD Forex Technical Analysis – Strengthens Over .7304, Weakens Under .7266

The Australian Dollar is trading nearly flat early Tuesday after posting a closing price reversal top the previous session. The price action reflects general cautiousness ahead of Australia’s quarterly GDP report on Wednesday and Friday’s U.S. Non-Farm Payrolls report that could help determine the U.S. Federal Reserve’s path toward tapering its massive stimulus.

At 03:15 GMT, the AUD/USD is trading .7294, down 0.0001 or -0.02%.

Also capping gains are worries about China’s slowing economic growth. China’s factory activity expanded at a slower pace in August as coronavirus-related restrictions and high raw material prices pressure manufacturers in the world’s second largest economy, while services activity contracted sharply, national data showed Tuesday.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside with the formation of a potentially bearish closing price reversal top on Monday.

A trade through .7318 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through .7222.

Taking out .7284 will confirm the closing price reversal top. This won’t change the main trend to down, but it could trigger the start of a 2 to 3 day correction.

The short-term range is .7427 to .7106. The AUD/USD is currently testing its retracement zone at .7266 to .7304. Additional resistance is the Fibonacci level at .7379.

The minor range is .7106 to .7318. Its retracement zone at .7212 to .7187 is the nearest support area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to .7304.

Bullish Scenario

A sustained move over .7304 will indicate the presence of buyers. The next target is Monday’s high at .7318. This is a potential trigger point for an acceleration to the upside with the next target the longer-term Fibonacci level at .7379.

Bearish Scenario

A sustained move under .7304 will signal the presence of sellers. Taking out .7284 will confirm the closing price reversal top. This could trigger a further break into .7266.

If .7266 fails as support, the selling pressure could extend into .7222, followed by .7212.