- The Aussie dollar rallied early during the day on Thursday to break above the 0.65 level.
- This is an area that has been important multiple times in the past, so does make certain medicines that we would revisit it.
- The fact that we have broken above there does suggest that the market is trying to get to the 0.6550 region, which is an area that I think a lot of people will be looking to that area as a major resistance barrier, so it’ll be interesting to see whether or not we can break above there.
If we could break above there, then it’s likely that the Aussie dollar will go looking to the 50-Day Exponential Moving Average next, perhaps even the 200-Day EMA. After that, we have the 0.6625 level that then offers significant resistance.
The Ultimate Scenario
On the other hand, we could end up pulling right back into the consolidation region, making the 0.65 level the fulcrum for price action. That’s been the case in the past, it would just be a simple return to noisy and sideways behavior. With that market attitude, you’d be looking at short-term scalping back-and-forth in order to take advantage of what would be short-term trading. You could use an oscillator to trade that market, and it could very well end up being a situation where traders are glued to their screens on short-term charts to make money.
Keep in mind that the Australian dollar is highly levered to the commodity markets, and of course global growth. Both of those are a bit of a mess at the moment, so it does make sense that the Aussie continues to struggle longer term. Furthermore, the Australian dollars highly levered to the Chinese economy, which has its own issues. It’s worth noting that the US dollar did slip a little bit overall early in the session, so that might be part of what we are seeing here, just a simple reaction to other currency markets around the world. Ultimately, I don’t see this market making big moves, but if we were to turn around and drop below the 0.64 level, that could bring in a flood of selling pressure as traders try to get involved in the latest “FOMO trade” at that point in time.
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