AUD/USD Price Forecast: Gaps open and falls towards floor of range

AUD/USD gaps open on Monday and declines.
The pair is in a sideways range and will probably continue oscillating.
Gaps have a habit of getting filled, suggesting an up leg will eventually develop within the range.

Joaquin Monfort FXStreet

AUD/USD is falling within a range encompassed by the green (ceiling) and red (floor) dashed lines on the chart below.

AUD/USD 4-hour Chart

At the start of trading on Monday the pair opened a gap between between 0.6515 and 0.6524 (green rectangle). It has been selling off ever since.

AUD/USD will probably eventually fill the gap since technical analysis theory says that “the market abhors a gap”. This means gaps do not tend to remain open. When they occur within a sideways market they usually close more quickly.

It is possible the Aussie pair might fall to the region of the range lows in the 0.6440s first before recovering and filling the open gap.

Alternatively it may stop falling before it reaches the bottom of the range and recover. At the moment there are no signs of the selling letting up.

The (blue) Moving Average Convergence Divergence (MACD) indicator has crossed below its red signal line, which is a sell signal and reinforces the case for price falling towards the range lows.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

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