AUD/USD Forecast - Aussie Weak, So Sell the Rallies: Looking Bearish Below the $0.7000 Handle

• The AUD/USD has done very little during the trading session on Friday, as we continue to hang around the 0.6950 level with no real delivery of momentum.
• Ultimately, this is a market that has recently seen a massive selloff, and I do think that continues to be a major issue.
• Because of this, I like the idea of fading short-term rallies, and we have seen this all week.

The Australian dollar is highly levered to the Asian economy and of course the Chinese reopening. While that should be a strong event for the Aussie, the reality is that we just don’t know how that’s going to go. Quite frankly, the Chinese numbers have not been overly impressive, and if that’s going to be the case it does leave the Australian dollar a bit vulnerable.

Looking to Fade the Rallies

Furthermore, you must look at it through the prism of whether the overall trading environment is one of “risk on”, or if it is going to be “risk off.” The attitude of the world right now seems to be one of fear, see you clearly need to be cautious with that, and of course, that does tend to help the US dollar in general.

If we break above the 0.70 level, then I think it’s very likely that we can investigate the 0.72 level above. That’s an area where we have seen some resistance in the past, and of course the top of the negative candlestick from the previous week. If we do break down below the 200-Day EMA underneath, then it’s very likely that we go plunging toward the 0.67 level, an area that had been rather important for a while previously. Because of this, I think you’ve got a situation where the market continues to look at this as a “fade the rally” type of situation, and that will almost certainly continue as there is so much uncertainty in general. I don’t like the idea of getting too big on anyone's position, but I recognize that if we do in fact see a bigger and impulsive move, it might be time to start adding to positions as I think once we truly take off, we could get quite a bit of momentum in the market. All we need is some type of catalyst.