- AUD/USD opens with gaps on Monday and falls.
- The pair is in a sideways range and will likely continue to swing.
- Gaps have a habit of filling, suggesting that a bullish leg will eventually develop within the range.
AUD/USD is falling within a range encompassed by the dashed green (ceiling) and red (floor) lines on the chart below.
AUD/USD 4-hour chart
At the start of trading on Monday, the pair gapped between 0.6515 and 0.6524 (green rectangle). It has been selling ever since.
AUD/USD will probably eventually fill the gap as the theory of technical analysis says that “the market hates a gap.” This means that the gaps do not tend to remain open. When they occur within a sideways market, they usually close more quickly.
It is possible that the Australian pair will first fall to the region of the range lows in the 0.6440s before recovering and filling the gap.
Alternatively, you can stop falling before reaching the bottom of the range and recover. At this time there are no signs that sales are slowing down.
The Moving Average Convergence/Divergence (MACD) indicator (blue) has crossed below its red signal line, which is a sell signal and reinforces the case for the price to fall towards the range lows.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
