AUD/USD Forex Technical Analysis – October 24, 2016 Forecast

Sellers hit the AUD/USD on Friday as they continued to react to the disappointing Australian jobs report, increasing chances of a Fed rate hike and this week’s very important consumer inflation report. There are no domestic reports or major U.S. economic releases on Monday, but investors will get the opportunity to react to the latest comments from three FOMC Member speeches.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum turned down with the formation of the closing price reversal top on October 20 at .7734 and the subsequent follow-through move on October 21.

A trade through .7734 will signal a resumption of the uptrend. A move through .7506 will turn the main trend to down.

The main range is .7441 to .7734. Its retracement zone is .7588 to .7553. The upper or 50% level of this range was tested on Friday and produced a technical bounce. This zone is a major downside target so investors should watch it carefully, if tested, for signs of buyers.

The short-term range is .7506 to .7734. Its retracement zone is .7620 to .7593. This zone was the first downside target.

The combination of the two retracement zones makes .7593 to .7588 a potential support cluster. This area was tested successfully on Friday.

Forecast

Based on the close at .7604 and Friday’s price action, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .7588.

Holding above .7588 will indicate that buyers are coming in to preserve the uptrend. Holding the short-term Fib level at .7593 will also signal the presence of buyers. This could create enough upside momentum to challenge the short-term 50% level at .7620.

Overcoming .7620 will indicate the buying is getting stronger. Look for an acceleration to the upside on a move over .7646 with .7654 the next target.

The AUD/USD could break sharply if .7588 fails as support. This could trigger a break into an uptrending angle at .7576. This is followed by the main Fib level at .7553 and another uptrending angle at .7541. This is the last potential support angle before the .7506 main bottom.

Watch the price action and read the order flow at .7588 on Monday and perhaps all week since this is a major 50% level. Trader reaction to this price will tell us if the buyers are coming in to support the trend or if the selling is getting stronger.