- The AUD/USD currency pair has rallied rather significantly during the trading session on Monday, but as you can see, the market seems to be struggling with the 0.70 region.
- The 0.70 region is significant resistance that extends at least 50 points.
- I think that the market is going to continue to see a lot of noise due to the fact that there are concerns when it comes to global risk appetite.
Eventual Interest Likely
At this point, the 50-day EMA sits right in the middle of the candlestick for the session, so it does suggest that it is probably only a matter of time before we start seeing a lot of interest overall. If we were to break down below the 0.69 level, that opens up the possibility of the Australian dollar falling quite drastically. At that point, the market more likely than not will go down to the 0.67 level, which is an area that has offered up massive support in the past.
If we were to break down below there, it would almost certainly come down to a major turnaround in risk appetite and the US dollar strengthening against almost everything. With this being the case, the market is likely to enter a tailspin in almost anything close to being a risk appetite asset. Ultimately, the Australian dollar would have to clear the 0.7050 level on a daily close to making a strong statement, something that it has not been able to do since June. Because of this, I think it’s likely that we will continue to see a lot of selling pressure more than anything else. Because of this, I am looking for signs of exhaustion to get involved with and will continue to buy US dollars whenever I get the possibility to pick them up “on the cheap.”
If we do break out to the upside, the 200-day EMA is an area that we need to pay close attention to and breaking above that would obviously be a very bullish turn of events. However, I think it would take quite a bit of shift in momentum overall. I don’t expect that, so I think given enough time we will break down more than anything else. Whether or not we can break down below 0.67 is a completely different question as well.
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