AUD/USD Forex Technical Analysis – October 8, 2018 Forecast

The Australian Dollar is trading slightly higher on Monday, but due to a bank holiday in the U.S. and Japan, volume and volatility are well-below average. Chinese traders returned from a week-long holiday, but they haven’t been aggressive at all.

An aggressive move by the People’s Bank of China may be helping to hold prices in a range. On Sunday, China’s central bank moved to support the economy by slashing the level of cash that banks must hold as reserves. The move was another attempt by the PBOC to try to support the domestic economy, amid the headwinds from the trade tensions.

At 0744 GMT, the AUD/USD is trading .7051, up 0.0002 or +0.02%.

The longer-term trend is down, but the market may be due to a short-term counter-trend rally in order to alleviate some of the downside pressure. The catalysts behind the Aussie’s weakness is a strengthening U.S. economy and a hawkish U.S. Federal Reserve.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7042 will signal a resumption of the downtrend. The next major target is the February 9, 2016 main bottom at .6973.

The AUD/USD is down eight sessions since its last main top. This puts it in a position to form a closing price reversal bottom. This won’t change the main trend, but it could lead to a 2 to 3 day counter-trend rally.

If .7314 to .7042 becomes a short-term range then its retracement zone at .7178 to .7210 will become the primary upside target.

Daily Technical Forecast

Based on the early trade, the direction of the AUD/USD is likely to be determined by trader reaction to Friday’s low at .7042.

Holding above .7042 will indicate the presence of counter-trend buyers. If this move creates enough upside momentum then we could see a short-term rally into the nearest downtrending Gann angle currently at .7154. This angle is dropping .002 per day.

A sustained move under .7042 will signal the presence of sellers. This could lead to a test of a steep downtrending Gann angle at .6994. Crossing to the weak side of this angle will put the AUD/USD in a bearish position with .6973 the next likely target.

In the third scenario, sellers take out .7042 then the AUD/USD turns higher for the session. This closing price reversal chart pattern will indicate the buying is greater than the selling at current price levels. This could fuel a 2 to 3 day correction if confirmed.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.