AUD/USD Forex Technical Analysis – October 3, 2018 Forecast

The Australian Dollar is trading lower early Wednesday, but inside yesterday’s range. The price action suggests investor indecision and impending volatility. On Tuesday, the currency posted a steep loss with the selling fueled by a dovish Reserve Bank of Australia, but mostly by a drop in demand for risk. Investors were reacting to a steep sell-off in the Euro due to escalating financial tension between Italy and the European Union.

At 0405 GMT, the AUD/USD is trading .7175, down 0.0015 or -0.19%.

The early price action suggests counter-trend buyers are trying to establish support inside a major retracement zone. If successful, this would also form a secondary higher bottom.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7142 will reaffirm the downtrend.

The main range is .7085 to .7314. Its retracement zone at .7200 to .7172 is currently being tested. Trader reaction to this zone will determine the near-term direction of the Forex pair.

Daily Technical Forecast

Based on the early price action and yesterday’s low at .7162, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at .7165.

A sustained move over .7165 will indicate the presence of counter-trend buyers. Overcoming and sustaining a move over .7172 will indicate the buying is getting stronger. If this creates enough upside momentum then look for the rally to extend into the 50% level at .7200, followed by a downtrending Gann angle at .7214. Since the trend is down, sellers are likely to come in on the first test of this angle.

The angle at .7214 is also the trigger point for an acceleration to the upside.

Taking out .7165 with conviction could trigger an acceleration to the downside with the first target the main bottom at .7142. A break through this level could a steep break into the next uptrending Gann angle at .7125. This is the last potential support angle before the .7085 main bottom.

Basically, we’re looking for an upside bias on a sustained move over the downtrending Gann angle at .7214. Look for a downside bias to develop on a sustained move under the uptrending Gann angle at .7165.