AUDUSD Forex Forecast – Selloff Confirmation!

AUDUSD seems to be tired from its climb since it already formed a head and shoulders reversal pattern on its 4-hour time frame. Price also broke below the neckline at the .7500 major psychological level, confirming its potential selloff.
The 100 SMA just crossed below the 200 SMA to indicate that the path of least resistance is to the downside and that the downtrend could gain traction. However, stochastic is still pointing up to suggest that there’s a bit of buying pressure in play.
In that case, AUDUSD could still pull up to the dynamic resistance around the moving averages, which might keep gains in check. A stronger rally could push price up to the resistance near the .7700 major psychological mark.
Economic data from Australia turned out mostly weaker than expected last week, as the economy lost 3.9K jobs in August and reported a drop in labor force participation. Data from China was mixed, with industrial production and retail sales beating expectations while CPI fell short.
This week, the RBA minutes are up for release and this should contain more clues on what the Australian central bank has in mind for the rest of the year. The RBA kept interest rates on hold in their previous decision, citing concerns about the housing market but still maintaining a relatively neutral view.
The bigger market mover for the week would likely be the FOMC statement, as market watchers are still divided on what the US central bank might do or say. Most market watchers seem to have priced against an interest rate for now but might be looking out for clues that tightening could still take place in December.
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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.