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

The Australian Dollar is edging higher on Wednesday as risk appetite returned to the global equity markets. The currency is also being helped by a jump in Australian consumer sentiment as well as position squaring ahead of Thursday’s employment reports.

A measure of Australian consumer sentiment soared in October to the highest since July 2018 in a sign of confidence in the country’s fiscal and monetary authorities for their handling of the coronavirus pandemic.

At 03:48 GMT, the AUD/USD is trading .7172, up 0.0011 or +0.15%.

The Westpac-Melbourne Institute Index of Consumer Sentiment released on Wednesday jumped 11.9% in October from September, when it climbed 18%. The index is now 13.2% above its level a year ago at 105.0 meaning optimists outnumbered pessimists.

It is the first ‘optimistic’ reading since June 2019.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Although momentum hasn’t officially shifted to the downside, it is in the midst of a two day correction from last week’s high.

The main trend will change to down on a move through the .7096 main bottom. A move through the .7243 minor top will signal a resumption of the uptrend.

The short-term range is .7414 to .7006. Its retracement zone at .7210 to .7258 is acting like resistance. This zone stopped the buying at .7243 on October 9.

The minor range is .7096 to .7243. The AUD/USD is currently straddling its 50% level or pivot at .7170.

The main support is the retracement zone at .7095 to .7020. This area is controlling the near-term direction of the AUD/USD.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the minor pivot at .7170.

Bullish Scenario

A sustained move over .7170 will indicate the presence of buyers. If this create enough upside momentum then look for a surge into the short-term 50% level at .7210. This is followed by the minor top at .7243 and the short-term Fibonacci level at .7258. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7169 will signal the presence of sellers. The first downside target is this week’s low at .7151. We could see an acceleration into the support cluster at .7096 – .7095 if this price is taken out by aggressive sellers.