AUDUSD is leading losses among the majors in this morning’s trading on news that some Australian cities go back into lockdown. As of this writing, the currency pair is down by 0.32% as it trades around 0.6941. Technicals suggest even more downside potential ahead for AUDUSD.
Some cities in the state of Victoria have gone back into lockdown as it recorded 165 new coronavirus cases in the past day. Melbourne, Mitchell, and a few more cities will need to endure another six weeks of restrictions as officials attempt to curb the spread of the pandemic. Meanwhile, surrounding states have closed off travel from those coming from Victoria.
According to analysts, the re-imposition of lockdown measures could weigh down Australia’s economic growth by 1.5% to 2.0%. Additionally, it may also cause a downtick in business and consumer confidence for the country.
On the 4-hour time frame, it can be seen that AUDUSD has been rejected at 0.6995. Because this happened twice, a double top chart pattern on the currency pair has materialized. When you enroll in our free forex trading course, you will learn that this is widely considered as a bearish reversal signal. A strong close below the neckline support at 0.6926 could mean that we could soon see the currency pair fall to its June 30 lows around 0.6832.
Alternatively, if there are enough buyers in the market to push AUDUSD above its most recent highs at 0.7000, the chart pattern could be invalidated. AUDUSD could then continue on trading higher to its near-term resistance around 0.7040 where it peaked on June 9.
AUDUSD, 4-Hour Chart