AUD/USD Forex Technical Analysis – Sustained Move Under .7118 Pivot Could Trigger Break into .7063

The Australian Dollar is edging lower early Thursday as the risk of a faster U.S. Federal Reserve tapering and early rate hikes roiled global markets to the benefit of the U.S. currency. The news is also helping to underpin Treasury yields early in the session. The early price action suggests short-sellers have their eyes on the 13-month low hit late Tuesday.

At 04:50 GMT, the AUD/USD is trading .7099, down 0.0007 or -0.09%.

While the Fed is expected to pursue a more aggressive tightening path, the Reserve Bank of Australia (RBA) still insists a local rate rise is not likely until at least 2023, though the risk is for an earlier move given data show the economy is rebounding faster than previously expected. Nonetheless, the U.S. Dollar is the more attractive asset at this time.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7063 will signal a resumption of the downtrend. A move through .7556 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 Forex pair is ripe for a potentially bullish closing price reversal bottom.

The minor trend is also down. A new minor bottom was formed on Tuesday at .7063. A trade through .7173 will change the minor trend to up. This will shift momentum to the upside. A trade through .7063 will indicate the selling pressure is getting stronger.

The new minor range is .7063 to .7173. The AUD/USD is currently trading on the weak side of its pivot at .7118, making it resistance.

If the minor trend turns up then look for a test of the next 50% level at .7217, followed by the short-term retracement zone at .7247 to .7291.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7118.

Bearish Scenario

A sustained move under .7118 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the minor bottom at .7063.

Taking out .7063 will indicate the selling pressure is getting stronger with the next targets the November 2, 2020 main bottom at .6991 and the July 16, 2020 main bottom at .6963.

Bullish Scenario

A sustained move over .7118 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the minor top at .7173.

A move through .7173 will indicate momentum is getting stronger with a series of retracement levels at .7217, .7247 and .7291 the next likely upside targets.