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AUD/USD Forex Technical Analysis – Struggle at .7267 Could Trigger Pullback into .7188 – .7169

By:
James Hyerczyk
Published: Aug 25, 2021, 07:59 UTC

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to .7267.

AUD/USD

In this article:

Australian Dollar bulls appear to be taking a breather early Wednesday after a two-day counter-trend rally into its highest level since August 17 the previous session. In addition to being counter-trend, the move was also fueled by short-covering tied to a rebound in commodity prices and record highs on Wall Street that boosted risk sentiment.

At 07:54 GMT, the AUD/USD is trading .7252, down 0.0007 or -0.09%.

This current rally is likely to be limited, however, because the domestic news on the coronavirus surge is not so good. According to the headlines, New South Wales reported another record number of COVID-19 cases with no sign of lockdowns ending in Sydney, Melbourne or Canberra, anytime soon.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7106 will signal a resumption of the downtrend.

A move through .7427 will change the main trend to up. This is highly unlikely, which suggests the AUD/USD may have to build a support base before challenging the major tops.

The short-term range is .7427 to .7106. Its retracement zone at .7267 to .7304 is resistance. The lower or 50% level of this range stopped the rally on Tuesday at .7271.

The minor range is .7106 to .7271. Its retracement zone at .7188 to .7169 is the next downside target. If a support base is going to form then it will following a test of this area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to .7267.

Bearish Scenario

A sustained move under .7266 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor retracement zone at .7188 to .7169.

Watch for aggressive counter-trend buyers on the first test of this area. They will be trying to form a potentially bullish secondary higher bottom.

If .7169 fails as support then look for another sharp break into the main bottom at .7106.

Bullish Scenario

A sustained move over .7267 will signal the presence of buyers. Taking out .7271 will indicate the buying is getting stronger with .7304 the next likely target.

For near-term traders, the Fibonacci level at .7304 is a potential trigger point for an acceleration to the upside with .7379 the next major target.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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