AUD/USD Forex Technical Analysis – Trader Reaction to .7170 Sets Early Tone

The Australian Dollar fell on Tuesday after reports that China has halted coal imports from the country as their relations deteriorate while the U.S. Dollar recovered from a three-week low reached the day before.

State-owned utilities and steel mills in China received verbal notice from China’s customs to stop importing Australian thermal and coking coal with immediate effect. In the U.S., news that a Johnson & Johnson COVID-19 study was paused due to an unexplained illness in a participant contributed to the U.S. Dollar’s strength.

On Tuesday, the AUD/USD settled at .7161, down 0.0050 or -0.60%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7096 will change the main trend to down. A move through .7243 will signal a resumption of the uptrend.

The short-term range is .7414 to .7006. Its retracement zone at .7210 to .7258 is resistance. This zone stopped the rally at .7243 on October 9. Trader reaction to this zone will determine the near-term direction of the AUD/USD.

The minor range is .7096 to .7243. On Tuesday, the AUD/USD settled on the weak side of its 50% level at .7170, making it new resistance.

The major support is a long-term retracement zone at .7095 to .7020. This may be the primary downside target area.

Short-Term Outlook

Based on Tuesday’s close at .7161, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the minor pivot at .7170.

Bearish Scenario

A sustained move under .7170 will indicate the presence of sellers. If this move is able to generate enough downside momentum then we could see an extension of the selling pressure into the support cluster at .7096 to .7095.

Bullish Scenario

Overtaking and sustaining a rally over .7170 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the short-term 50% level at .7210, followed by the minor top at .7243 and the short-term Fibonacci level at .7258.