AUD/USD forecast for the week of October 6, 2014, Technical Analysis

The AUD/USD pair initially rallied during the course of the week, slamming into the 0.88 handle. That level of course is massively resistive, and as a result we feel that the sellers will continue to step into this marketplace every time we rally. After all, the gold markets have been absolutely brutalize lately, and have broken down below the $1200 level, which is a sell signal for the longer-term charts as well. We believe that the gold markets are heading down to the $1000 handle, and that should translate into a much lower valued Australian dollar.

The shape of the candle of course tells us that the sellers are still in control and pressing the issue, and as a result we feel that the market will more than likely head to the 0.85 level looking for support. If we can get below there, we could go as low as the 0.80 handle. In fact, the 0.80 handle is a longer-term “pivot point” of sorts, as the market has quite often found the area to be like a magnet for price over the last several decades.

On the other hand, if we did break above the top of the shooting star for the week, it’s very likely that this market goes to the 0.90 level. The level is a significantly resistive very as well, so at that point time we would really like to see some type of resistant candle in order to start selling again, as we believe that this market will offer plenty of selling opportunities going forward for the rest of the year. If we did somehow get above the 0.90 level, this market could go as high as 0.9350 of the course of the next several weeks. However, we are a long way from doing that so it’s very likely that at this point time we won’t get an opportunity to buy the Australian dollar anytime soon. Remember to watch the gold markets, they should end up leading the way as the correlation continues longer-term.