- The AUD/USD has rallied a bit during the trading session on Monday, as we continue to the core all right along this uptrend line of the bullish channel.
- The 50-Day EMA sits right around the same area as well, so that is something worth paying attention to.
- If we were to break down below that indicator, that could trigger more algorithmic trading.
Keep in mind that the Australian dollar took an absolute beating last week, but we have not broken through the support level. Once that support level gets broken through, that probably brings in quite a bit more selling pressure. In that scenario, we could see the Australian dollar drop all the way down to the 0.65 level. The markets will of course continue to be very noisy, and I think that’s going to be a feature of the last 2 weeks of the year, as liquidity disappears.
Liquidity to Disappear Over the Next Couple of Weeks
The Australian dollar is highly sensitive to the commodity markets, so that is something worth paying attention to, especially as the markets will have to deal with the idea of whether or not the global economy is going to slow down. A global recession would be horrible for Australia because they rely on other economies to buy their hard assets. The channel has held so far, so that is something worth paying attention to. If we do rally from here, I suspect that the market will see plenty of sellers above, especially near the 200-Day EMA.
That is obviously a longer-term indicator that a lot of people pay attention to, and of course, is sitting just below the 0.69 level. The 0.69 level has a bit of historic significance attached to it, so it would not be surprising at all to see a little bit of pushback if we do get to that area. If we were to break above it, then we have the potential a move to the 0.70 level above. The 0.70 level is a large, round, psychologically significant figure, and an area where we have seen a lot of action in the past as well. All things being equal, this is a market that will continue to see liquidity disappear over the next 2 weeks so it’s hard to imagine major moves between now and next year.
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