Forex Weekly Analysis - AUDUSD 22nd to 26th October

• A look at the daily timeframe AUDUSD chart below shows the 1.0160 area has once again held as support over recent weeks, after the market ran the stops under the previous swing low at 1.0165.
• The AUDUSD is struggling around the 50% retrace and 1.40 level. Price has now moved as high as the 50% retrace of the previous significant swing lower (from the 1.0620 area range highs) and formed a minor Pin Bar/shooting star on Thursday (less than ideal shape with the small upper shadow).  Despite the less than ideal shape the Pin Bar has seen the market move down close to the 38.2% Fibonacci retrace level.
• In terms of potential support and resistance levels – the broken descending trend line could potentially see resistance turn into interim support in the event of a swift and prolonged move lower early next week.  The previous resistance swing high around 1.0300 could likewise potentially see support in the event of a move lower; this has the 50% retrace of the recent move higher located just underneath – thus providing confluence (see this area highlighted below).
• We note that the 1.0150 support area is a significant level for AUDUSD and any sustained move below this price may see increased volatility.  To the upside, the 1.0600 area range highs mark the key resistance level in the near to mid-term.  It is also worth noting that clearly defined ranges like this can often see the midpoint act as a kind of price pivot level.
• The latest COT report shows that speculative futures traders had cut back on the open net long Australian dollar position by 3% on the weekly basis.
• One catalyst for a break of the current range could come if the RBA cuts rates again.  The next meeting is due on November 6th and minutes from the last RBA meeting in October, along with rhetoric from Governor Stevens, suggests there remains scope for an additional reduction of the key rate.  3Q CPI data, due on October 24th, could have a bearing on this decision and is therefore worth monitoring.

Related terms: AUDUSD technical analysis, AUDUSD analysis, AUDUSD forecast.