AUD/USD Forex Technical Analysis – Trader Reaction to .7096 Sets the Tone on Wednesday

The Australian Dollar is trading lower on Wednesday in a volatile session as traders tried to place bets on the ever-changing U.S. presidential results with the final tabulation not expected for days.

Early in the session, the U.S. Dollar was pressured as investors increased their bets on a victory by Democratic challenger Joe Biden. However, the greenback clawed back those losses and more after preliminary results started to show the race for president would be closer than originally thought.

At 07:43 GMT, the AUD/USD is trading .7076, down 0.0090 or -1.25%.

In other news, Australian retail sales fell 1.1% in September from the month earlier, official data showed on Wednesday. The monthly decline was led by household goods and food retailing, though both industries continue to trade at elevated levels compared to the same time last year, according to data from the Australian Bureau of Statistics (ABS).

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Tuesday when buyers took out the last swing top at .7158. A trade through .6991 will change the main trend to down.

The AUD/USD is currently testing a key retracement zone at .7096 to .7020. Trader reaction to this zone could determine the longer-term direction of the Forex pair.

The short-term range is .7414 to .6991. Its retracement zone at .7203 to .7252. This area stopped the earlier rally at .7221 and should be concerned resistance and a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD is likely to be determined by trader reaction to the main 50% level at .7096.

Bullish Scenario

A sustained move over .7096 will indicate the presence of buyers. If this move can create enough upside momentum then look for a potential retest of .7203 to .7221, followed by .7252. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7096 will signal the presence of sellers. This could trigger a break into .7020, followed closely by a main bottom at .6991. If this main bottom fails then look for the selling to possibly extend into a pair of main bottoms at .6963 and .6921.

Side Notes

Look for the volatility to continue throughout the day as it has become too difficult to declare a clear winner in the U.S. presidential election. The current price action suggests traders are betting on Trump, but it appears to me that whoever wins, the loser will challenge the results in court.

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