AUD/USD Forecast October 31, 2017, Technical Analysis

The Australian dollar rallied a bit during the day on Monday initially, but then rolled over a bit later in the day. The market continues to find resistance near the 0.7750 level, extending to the 0.78 level. This is an area that was previously a massive resistance, then breaking to the upside above there. The move was completely reversed once we got to the 0.80 level though, which is an area that matters significantly on charts going back decades. With the Federal Reserve looking likely to raise interest rates, I still favor the US dollar, and until we can get above the purple rectangle on this chart, I think the only thing you can do is sell on rallies. I recognize that the 0.75 level underneath should be support, but if we break down below there, the market probably goes down to the 0.72 level, and then 0.70. I recognize that the pair will be very volatile, and of course gold will have its influence. However, this is a market that continues to struggle to hang on to gains.
I believe that short-term trading is probably the best way to deal with the Aussie dollar, as the volatility will continue to be extreme. The alternative of course is to trade small positions, adding as the trade works out in your favor. That being said, is very likely that the market continues to bounce around significantly, and therefore caution is the better part of valor. If gold falls, that should help the downward momentum, but I think that the gold market breaking above the $1300 level for the longer-term move, that would be something different, perhaps giving the Australian dollar the ability to rally. I suspect that isn’t going to happen though, so I suggest selling is probably the easiest way to deal with this market.