- The AUD/USD experienced a tumultuous day on Monday as it attempted to rise but eventually plummeted in value. It's important to note that the market fell below a significant level at 0.64, which has played a crucial role in the past.
- Currently, the market is ensnared in a downward wedge pattern that has persisted for some time.
- Should this trend continue, the 0.6350 level will serve as critical support. If the market breaches this level, it may encounter further losses, potentially reaching as low as 0.62.
On the flip side, if the Australian dollar manages to reclaim the 0.64 level, it may seek to retrace its steps back to the shooting star observed during the Friday session. The shooting star marked a notable reversal after an initial attempt to break out. Breaking above the high point of the shooting star could open the door to a potential move up to the 0.66 level, a region that has previously provided support. “Market memory” will certainly come into play in this area, so It's crucial to consider the market's historical behavior in this area, as well as the presence of the 200-Day EMA, which could act as a resistance point. However, it's uncertain whether the market will even reach that level.
Looking for Cheap Dollars
Currently, it seems prudent to approach this market with a strategy of fading rallies when signs of exhaustion emerge. Despite short-term fluctuations, the market finds itself at a significant support level from a long-term perspective. The key question now revolves around whether the market will continue to decline. For the time being, it appears that short-term rallies represent the best opportunities to acquire US dollars at a favorable rate. It's essential to keep in mind that the Australian dollar is strongly influenced by developments in China and the overall performance of commodities. Since commodities are closely tied to global economic growth, these factors are contributing to the heightened volatility in the market.
Consequently, it may be advisable to take smaller, short-term positions to navigate these uncertain markets effectively. In this environment, I find that the market is a major beast as far as volatility is concerned, and therefore you need to be very cautious. Nonetheless, it is difficult to get long anytime soon, and therefore I still prefer the US dollar overall. Looking for “cheap dollars” continues to be the play.
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