AUD/USD Forex Technical Analysis – Tuesday’s Closing Price Reversal Bottom May Have Signaled Momentum Shift

The Australian Dollar is trading marginally higher early Wednesday, despite giving back most of its earlier gains that were fueled by better-than-expected economic data. An easing of tensions over the spreading of the coronavirus is also underpinning the Aussie after encouraging profit-taking the previous session.

Earlier in the session, the Australian Dollar moved up from a three-month low after inflation data came in slightly better than expected, encouraging investors to price out almost any chance of a cut in interest rates next week by the Reserve Bank (RBA).

At 07:20 GMT, the AUD/USD is trading .6766, up 0.0003 or +0.05%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The next downside targets are a pair of main bottoms at .6724 and .6710. These are the last potential support levels before the October 2, 2019 main bottom at .6671.

The main trend will change to up on a move through .6934. This is highly unlikely today, but yesterday’s closing price reversal bottom and today’s confirmation of the chart pattern may be indicating a shift in momentum to the upside.

The major range is formed by the July 19, 2019 main top at .7082 and the October 2, 2019 main bottom at .6671. Its retracement zone at .6877 to .6925 is controlling the near-term direction of the Forex pair. Closing below this zone is helping to generate the downside target.

Daily Technical Forecast

Based on the early price action and the current price at .6766, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at .6775.

Bearish Scenario

A sustained move under .6766 will indicate the presence of sellers. The first minor target is .6757, followed by the minor bottom at .6737. If this fails then look for a break into the support cluster at .6724 to .6723.

The Gann angle at .6723 is the last potential support angle before the main bottoms at .6710 and .6671.

Bullish Scenario

A sustained move over .6766 will signal the presence of buyers. If this move can create enough upside momentum then look for a possible rally into the downtrending Gann angle, currently at .6732, over the near-term.