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S&P 500 SLIPS BELOW 5,000; NASDAQ SINKS ON TECH DRAG

Nvidia tumbles 10%, Amazon loses more than 2% while Apple ends 1% lower

AUD/USD forecast for the week of October 16, 2017, Technical Analysis

Christopher Lewis
Updated

The AUD/USD pair rallied during the week, showing signs of support near the 0.77 handle. As you can see, we had recently broken out above an ascending triangle, and now we have retested that level. By forming a strong candle, it looks as if the Australian dollar will continue to go higher from here, and therefore I have no interest whatsoever in shorting this market until we were to break down below the lows from the previous week, which I don’t think’s going to happen. Gold markets can rally, it’s likely that the Australian dollar will follow as well, and I recognize that the 0.80 level above is massive resistance, but I also recognize that once we break above there the last time, the market ended up reaching towards the 0.90 level, and then eventually the parity level after that.

I recognize that it will be noisy, but at the end of the day, the Australian dollar should continue to be healthy, especially if the Federal Reserve looks likely to slow down its interest rate hike cycle, which I think traders are starting to come to grips with. After all, normalization in America used to mean interest rates somewhere closer to the 4 or 5% level. Recently, we have seen the Federal Reserve members talking about normalization being closer to the 2% level, which is much lower than historical norms, so by that very nature the Australian dollar should be worth more over the longer term. Because of this, I think that we have broken out, I think that the market is starting to change its overall attitude, but I also recognize it takes a lot of momentum to continue a decisive move higher. Patients should pay off though.

AUD/USD Video 16.10.17

This article was originally posted on FX Empire

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