AUD/USD Forex Technical Analysis – October 20, 2014 Forecast

The AUD/USD finished slightly lower on Friday, but remained inside of a tightening triangle chart formation. This chart pattern typically indicates trader indecision, but also impending volatility. After several days of trading inside the triangle, pent up boredom by traders often leads to a volatile breakout. Traders tend to go with the way of the move after the breakout begins.

The upside breakout point is on a long-term downtrending angle at .8781. Above average volume must be present on the breakout or it will fail. The first target is an uptrending angle at .8862. A move over this angle will mean that the buying is getting stronger. The market opens up over this angle.

The next target is the main top at .8898. Overtaking this angle will turn the main trend to up on the daily chart. The main range is .9401 to .8642. Its retracement zone at .9021 to .9111 is the major upside target.

The short-term range is .8651 to .88595. The pivot price created by this range is .87745. This price is controlling the short-term direction of the market. The nearest support angle is .8752, followed by angles at .8697 and .8670. This is the last angle before the two main bottoms at .8651 and .8642.

Look for an acceleration to the downside if .8642 fails. The daily chart indicates that .8544 is a potential target. This price is a major 50% level on the monthly chart.

The tone of the day is likely to be determined by trader reaction to the short-term pivot at .87745. Holding above this level could create enough upside momentum to take out .8781 with conviction. A failure at .87745 could drive the AUD/USD back to the main bottoms.