AUD/USD Forex Technical Analysis – Strong Bounce Off One-Year Low Suggests Aussie is Nearing Bottom

The Australian Dollar posted a choppy trade on Tuesday before closing lower for the session as traders assessed the impact of the Omicron coronavirus variant on the world economy. Seemingly hawkish midday remarks by Federal Reserve Chairman Jerome Powell were also the source of volatility.

On Tuesday, the AUD/USD settled at .7129, down 0.0015 or -0.20%. The Aussie also hit its lowest level since November 4, 2020 at .7063 before recovering.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7063 early Wednesday will signal a resumption of the downtrend.

A move through .7431 will change the main trend to up. This is highly unlikely, but due to the prolonged move down in terms of price and time, the AUD/USD will begin Wednesday’s session inside the window of time for a potentially bullish closing price reversal bottom.

The minor trend is also down. A trade through .7371 will change the minor trend to up. This will shift momentum to the upside.

The first minor range is .7371 to .7063. Its 50% level at .7217 is the first upside target.

The second minor range is .7431 to .7063. Its retracement zone at .7247 to .7291 is the most important resistance area.

Since the main trend is down, sellers are likely to come in on a test of these retracement levels.

Short-Term Outlook

The direction of the AUD/USD early Wednesday is likely to be determined by trader reaction to .7117.

Bullish Scenario

A sustained move over .7117 will indicate the presence of counter-trend buyers. The first upside target is .7171. Taking out this level will indicate the buying is getting stronger with .7217 a potential target.

Bearish Scenario

A sustained move under .7117 will signal the presence of sellers. If the momentum is strong enough, this could lead to a retest of the one-year low at .7063. Taking out this level will mean the selling pressure is getting stronger with the November 2, 2020 main bottom at .6991 the next target, followed by the July 16, 2020 main bottom at .6963.