AUD/USD Forecast August 28, 2017, Technical Analysis

AUD/USD daily chart, August 28, 2017

The Australian dollar exploded to the upside as Janet Yellen gave her speech on Friday. The 0.79 level has even offered support on the short-term pullback, so I believe that the market is going to go looking towards the 0.80 level above. However, breaking above that level is going to take a significant amount of momentum for the market to do so. In fact, I do not believe it can happen until gold markets break significantly above the $1300 level, as it would be yet another catalyst for the Australian dollar to rise. If we do break above that level, then I think that the market is more a “buy-and-hold” situation. Otherwise, I suspect that the first signs of exhaustion could be a nice selling opportunity, as that level has been so important over the last several decades. All things being equal, I will probably be selling these rallies at the first signs of weakness, because the 0.0 level has been so important. However, it’s also been broken above several times in the past as well, so breaking out is not going to be impossible.

If we were to turn around to drop below the 0.79 level, that would be extraordinarily bearish and happy shorting this market rapidly. This is especially true after the impulsive move during the Janet Yellen speech, to a race that would be a very negative sign. Ultimately, at that point I would expect the market to go down to the 0.78 level, and then probably the 0.7750 level which was a major resistance barrier in the past, and should now be supportive. Volatility will be a constant in this market, and less of course we get that move above $1300 in gold which would give us fundamental reasons to believe that the Australian dollar market would continue higher.

Written by FX Empire