The AUD/USD has rallied rather significantly during the trading session on Monday, breaking above the psychologically important 0.70 level, and of course the top of the channel that we have been trading in for a while. By the end of the day, we ended up forming a shooting star, which of course is a negative side.
This is not necessarily assigned to jump in with huge, short positions, but it does make sense that we would pull back from here. After all, the 0.70 level is an area that a lot of people will be paying attention to because it is a large, round, psychologically significant figure, and an area that has been important multiple times in this pair. With that being the case, I’m looking at this as a short-term selling opportunity, perhaps down to the 200-Day EMA.
The market is Getting Tired
- On the other hand, if we break above the top of the shooting star from the Monday session, it opens up a big move to the 0.7150 level.
- Either way, keep in mind that the Australian dollar is highly sensitive to global growth and of course commodity markets, so you need to keep all of that in the back of your mind.
- It’s also worth noting that the 50-Day EMA is trying to do everything you can to break above the 200-Day EMA, kicking off the so-called “golden cross.”
- I don’t necessarily subscribe to this indicator, but a lot of people will pay close attention to it and start buying in the longer term.
The noisiness in this pair will probably continue, so it’s worth pointing out that you should have a reasonable size position in this market. I also think that the market could have a few surprises ahead, because quite frankly it seems like we are at a major inflection point, and therefore we could see a big move one way or the other. Be cautious but recognize that there are a couple of levels worth paying attention to for potential bigger moves. I think that at this point, a pullback is probably overdue, especially if we stay in the same channel that we are going to be paying such close attention to for directionality. I don’t think the Aussie falls apart, but clearly, we are getting a bit tired.
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