AUD/USD Forex Technical Analysis – November 7, 2018 Forecast

The Australian Dollar is trading higher on Wednesday. The catalyst behind the rally is the split U.S. mid-term election results. With the Democrats recapturing the House of Representatives and the Republicans holding on to the Senate, the government is basically at gridlock. Investors are betting against the U.S. economy and against the U.S. Dollar today because they feel legislative gridlock will reduce the chances of fiscal stimulus. Additionally, they feel that the Democrats could force Trump to make changes to his trade policy. This could lead to an easing of tariffs against China.

At 1332 GMT, the AUD/USD is trading .7290, up 0.0036 or +0.49%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The next target is the .7314 main top. This is followed by a pair of tops at .7363 and .7382. The Forex pair is not in a positon to change the main trend to down, but it is in the window of time for a potentially bearish closing price reversal top. This won’t change the trend, but it could lead to a 2 to 3 day counter-trend break.

A series of retracement levels is also controlling the price action. The main range is .7484 to .7020. Its retracement zone at .7252 to .7307 is currently being tested. Trader reaction to this zone is going to determine the near-term direction of the Forex pair.

The intermediate range is .7382 to .7020. Its 50% level at .7201 is new support. The short-term range is .7314 to .7202. Its retracement zone at .7167 is additional support.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the main Fibonacci level at .7307.

So far today, .7307 is acting like resistance. A sustained move under this level will indicate the presence of sellers. If this creates enough downside momentum then look for a potential pullback into the main 50% level at .7252. We could see a technical bounce on the first test of this level, but if it fails then look for the selling to extend into the next 50% level at .7201.

Taking out .7307 and sustaining the move will signal the presence of buyers. A drive through .7314 will reaffirm the uptrend. This could trigger a breakout to the upside with the next targets coming in at .7363 and .7382.

Holding inside .7252 to .7307 will indicate investor indecision.