- The AUD/USD made an initial attempt to rally during Wednesday's trading session but encountered a barrier at the 0.68 level, unable to overcome it.
- Consequently, the market appears to be retracing toward the previous consolidation area that has twice served as a price containment zone.
- A breakdown below the 200-Day EMA could indicate a return to the bottom of this rectangle, with a potential temporary pause at the 0.67 level, where the 50-Day EMA is currently situated. Given the significance of the 50-Day EMA as an indicator closely monitored by many traders, it is reasonable to expect its influence on price action.
If the support levels are breached, the market will likely test the 0.66 level, which marks the bottom of the previous consolidation range. This would signify a substantial downward move, reflecting the excessive volatility observed in recent times. Despite the market's noisy behavior, there is a possibility of finding support in this area. Alternatively, breaking above the 0.68 level would once again bring the 0.69 level into focus, serving as an intermediate milestone on the way to a more significant psychological level at 0.70.
Cautious Position Sizing is Advised
The Australian dollar remains highly sensitive to risk appetite and global concerns. If uncertainties persist worldwide, the currency is likely to experience turbulence. Consequently, caution is advised when determining position size, as heightened volatility may exacerbate market fluctuations. Furthermore, recent indications suggest the US dollar is gaining strength against several currencies, adding an additional layer of complexity to the market. It will be interesting to observe how these dynamics unfold, but for now, downward pressure appears to dominate the short-term outlook. Nevertheless, it is crucial to acknowledge the presence of potential support levels that could influence price movements.
Ultimately, it looks like the Australian dollar faced resistance at the 0.68 level, leading to a potential retracement toward the previous consolidation area. A breakdown below the 200-Day EMA could signify a return to the bottom of the consolidation range, with interim support expected at the 0.67 level. The 50-Day EMA adds further significance to this support area. The 0.66 level marks a critical point that could trigger a notable downward move. Despite ongoing market noise, there is a possibility of finding support within this range. Risk sensitivity and global uncertainties continue to impact the Australian dollar, contributing to its volatility. Therefore, cautious position sizing is advised. The growing strength of the US dollar against multiple currencies introduces an additional factor to consider. As the short-term outlook leans toward downward pressure, it is important to recognize potential support levels that may influence price dynamics.
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