- The AUD/USD experienced a slight decline during Thursday's trading session but found support around the 0.6620 level, which has proven significant in recent days.
- Additionally, the market is approaching the lower boundary of its overall consolidation area, with the 0.66 level serving as a key support level.
- On the upside, several barriers exist before considering a bullish stance. However, a return to the top of the larger consolidation area, around 0.68, remains a possibility without altering the current market dynamics.
Nevertheless, the market will encounter resistance on its way up, particularly at the 50-Day Exponential Moving Average (EMA) near the 0.67 level. Breaking above this level could pave the way for further gains toward the 200-Day EMA and, eventually, the 0.68 level, which has acted as the upper boundary of the consolidation pattern.
Given prevailing global economic uncertainties, it is likely that the market will continue to consolidate rather than make significant directional moves. The uncertain global economic outlook dampens the prospects for substantial risk-on behavior. Consequently, expect a noisy market environment and consider risk management strategies such as appropriate position sizing and well-placed stop-loss orders. Traders are likely to view the Australian dollar through the lens of a range-bound market. That being said, we will eventually see a breakout or breakdown, and open up a big move in general as well.
Traders Should Monitor Price Action
However, once a breakout occurs from this consolidation phase, there is potential for a rapid 200-pip move, as market participants have exhibited caution and hesitancy in recent times. It is important to note that global growth concerns, coupled with the traditionally slower summer season, may keep the Australian dollar somewhat compressed in the coming weeks. Nevertheless, eventually, the market will break out of the consolidation pattern and establish a new trend.
Ultimately, the Australian dollar found support around the 0.6620 level and approaches the lower boundary of its consolidation area. Key resistance levels, including the 50-Day EMA near 0.67, lie ahead. Given prevailing global economic uncertainties, the market is likely to consolidate, and risk management strategies become crucial. A breakout from the consolidation pattern may trigger a quick 200-pip move. However, concerns over global growth and the summer season may keep the market subdued for now. Traders should closely monitor price action and be prepared for potential breakout opportunities.
Ready to trade our Forex daily analysis and predictions? Check out the best forex trading platform Australia worth using.