The AUD/USD pair fell again during the session on Friday, heading towards the 0.90 level in the process. At this point in time, the Australian dollar is massively oversold in my opinion, and I also recognize that selling this pair at this point in time would be very reckless. It’s essentially “chasing the trade”, which is a very good way to find serious losses in the marketplace.
With that being said, I’m not ready to step in and buying this market yet. However, there is obviously a cluster somewhere around the 0.90 level from the month of January, so I would anticipate that the buyers will step in and try to buy the Australian dollar based upon value. This area could cause a bit of a bounce, if not a resumption of the uptrend. Either way, I am looking for supportive candle at this point in time in order to start buying. I do recognize that a move above here though will struggle with the 0.92 level, has significant resistance.
At the very least, we should have a bounce.
I see that the US Dollar Index is starting to look a little bit extended at this point, and I think that a correction needs to happen. This is true with most currency pairs, not just this one. Be markets have a severe lack of yield at the moment, so it’s difficult to imagine that people won’t be going for the swap in some of these pairs going forward. With that being the case, I believe that at the very least we can start looking to buying the Australian dollar as a potential short-term trade, and then if we break above the above the 0.92 level, the market could be held onto.
However, keep in mind that the markets are a bit confused at the moment and commodity certainly are taking it on the chin. With that being the case, I do recognize that if we move below the 0.89 handle, we could in fact start to see this market selloff in an accelerated manner. If that’s the case, I would not hesitate whatsoever to be aggressively short. Regardless, the 0.90 level is an area of attraction, and that means that we will have to make a decision.
