The AUD/USD has rallied a bit during the trading session on Tuesday as we continue to threaten the top of the trading channel. Furthermore, we are also threatening the 0.70 level, an area that obviously has a lot of psychology attached to it. I think we are looking at a situation where the market will probably try to figure out what to do with itself, because breaking above the top of this channel would take a pretty significant amount of effort.
- It looks as if there are plenty of people willing to push the situation.
- There are buyers waiting to take advantage of this market.
- You should keep in mind that the Australian dollar is highly levered to commodities and Asia, which of course did get a little bit of a surprise overnight as the Chinese GDP numbers came out a little bit better than anticipated.
- We are seeing China reopened again, so that in turn should be rather important for the Australian economy in general.
The 200-Day EMA is sitting right around the 0.68 level, with the 50-Day EMA sitting underneath it. The so-called “golden cross” could kick off if we continue to see this market move higher, and a lot of longer term traders like to hold onto the position in a “buy-and-hold” type of strategy. That being said, I expect a lot of choppiness and the fact that we are at the top of the channel does suggest that perhaps a pullback could be coming. Furthermore, we also formed a shooting star from the Monday session, so it would not surprise me at all if we have a little bit of follow-through.
Breaking above the top of the shooting star opens up a move to the 0.72 level, which was the scene of a significant high back in August of last year. Breaking above that really gets things cooking to the upside. If we get a major “risk off move”, then it will favor the US dollar, and we could see a significant pullback. These are interesting days we live in, as the market chooses not to believe that the Federal Reserve will remain extraordinarily hawkish, despite anything and everything that the Fed says.
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