AUD/USD forecast for the week of February 8, 2016, Technical Analysis

The AUD/USD pair initially tried to rally during the course of the week, but gave back all of the gains in order to form a massive shooting star. The bottom the shooting star sits right at the 0.70 level, so we break down below there I think that we will continue to see very bearish pressure in this market, and perhaps a fairly substantial move to the downside in the Australian dollar. This is a bit interesting, because the gold markets have been fairly strong, while the Australian dollar simply cannot keep gains or go much higher. You can see on the chart there is a former uptrend line that now is offering a significant amount of resistance. With this, the downtrend should continue to come into play.

On the other hand, if we broke above the top of the shooting star that would be a very bullish sign, and at that point in time we are more than willing to start buying this pair. We can probably go as high as the 0.75 level after that type of move, but at this point in time it looks like there’s almost nothing suggesting that we are about to do that.

Commodities in general are fairly soft, although like we mentioned previously, gold markets seem to be doing fairly well. That suggests to us that gold is going higher based upon fear, as the Australian dollar is not coming along for the ride. Also, you have to keep in mind that Asian markets are struggling with the idea of a serious lack of growth, so the Australian dollar of course will be shunned as well. Australia tends to provide most of Asia with its building materials and commodities in general, so if the Asian economies are struggling, and makes sense that the Australian economy will struggle with that as well. At this point, this seems to be a “sell only” type of market going forward, and should continue to be unless we see a massive reversal and a break above the shooting star.