AUD/USD Forecast October 18, 2017, Technical Analysis

The Australian dollar spent most the day on Tuesday falling, reaching towards the 0.7820 level. On the hourly chart, we are starting to form a supportive looking hammer though, and I think that we may start to see buyers enter this market. I believe that the 0.78 level underneath is massive support that extends down to the 0.7750 level. We have recently broken out above a significant resistance, and have now come back to test the previous resistance for support. That’s a classic signal to start going long, and I think that the Australian dollar is trying to find its footing. Ultimately, the gold markets will have to rally as well, as they have been sold off, and have a massive amount of influence when it comes to the Australian dollar. The 2 markets normally work in similar ways, so pay attention above.
The pullback should be thought of as a potential value play, but I recognize that the area above at the 0.80 level is massive resistance. That level goes back decades, so it makes sense that the market would have to attempt that break out several times. I don’t think it happens easily or in the near term, so I suspect that what we are going to see is more volatility and pullbacks to try to build up the necessary momentum to finally break out. Once we do break above the resistance area above, the markets free to go to the 0.90 level above the longer term. Pullbacks continue to offer value, and it’s not until we break down below the 0.7750 level that I would be concerned with the overall uptrend. I think volatility will be something that you should deal with, so be aware of this before putting any money to work.