AUD/USD Forex Technical Analysis – Strong Upside Momentum as .7820 Main Top Comes Back into Picture

The Australian Dollar is zooming higher on Monday on relatively light volume with U.S. financial markets closed for the Presidents’ Day holiday. Besides benefiting from increased demand for higher-risk equities and commodities, the Aussie is also being supported ahead of the rollout of coronavirus vaccines.

At 08:36 GMT, the AUD/USD is trading .7784, up 0.0023 or +0.29%.

Australia will begin inoculating against COVID-19 next week after receiving the first 142,000 doses of the Pfizer-BioNTech vaccine, while in New Zealand, vaccinations are planned to start February 20.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up last Thursday when buyers took out the previous main top at .7764. Today’s trade through .7772 signaled a resumption of the uptrend.

A trade through .7564 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, the AUD/USD still remains vulnerable to a closing price reversal top. This chart pattern won’t necessarily change the main trend to down, but traders could try to alleviate some of the upside pressure with a 2 to 3 day counter-trend correction.

The minor trend is also up. The new minor bottom is .7713. A trade through this level will change the minor trend to down. Trigger a shift in momentum.

The short-term range is .7820 to .7564. The AUD/USD is currently trading on the strong side of its retracement zone, making .7722 to .7692 new support. This zone is controlling the near-term direction of the Forex pair.

The major support zone comes in at .7579 to .7523.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD into the close will be determined by trader reaction to Friday’s close at .7761.

Bullish Scenario

A sustained move over .7761 will indicate the presence of buyers. Taking out the intraday high at .7788 will indicate the buying is getting stronger. This could trigger a surge into the January 14 main top at .7805 and the January 6 main top at .7820. The latter is a potential trigger point for an eventual test of the March 14, 2018 main top at .7916.

Bearish Scenario

A sustained move under .7761 will signal the return of sellers. If this creates enough downside momentum then look for a possible retest of .7722.

Finishing the session under .7761 will form a closing price reversal top. If confirmed by follow-through selling on Tuesday, this could trigger the start of a 2 to 3 day correction.

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