The AUD/USD pair has been falling lately, as the world continues to worry about Chinese slowdowns and European debt issues. The Chinese have been showing signs of slowdown lately, and this will weigh upon the Aussie dollar as the Australians send so much of their raw materials to the massive factories on the east coast of China.
The Chinese slowing a bit suggests that the global economy could be slowing down, and if this is the case – the Australian economy will suffer as their customers buy less. The Aussie is also a “risk barometer” as Forex community likes it as a proxy for taking on commodity risks as the world may need or not need such things as gold, copper, and aluminum.
The pair has been falling hard, and this is simply an extension of the headlines that have been coming over the wires as the fear of trouble continues to climb. (The VIX is climbing again as an example.)
1.02 is gone, parity could be next
The 1.02 level fell apart as support recently, and the potential bearish flag that I mentioned previously looks to be real now. The 1.02 level was my “sell point” in this pair, and I am presently short from just under there at this point. The pair will run into a bit of support at parity, but the fact is that the parity level has been sliced through enough over the last several months that it should only be a minor event at best.
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The candle from Thursday was a massive failure at a rally, and formed a shooting star. In this scenario, it suggests that there was a bit of a “last stand” attempt at a reversal by the bulls, only to be thwarted in the end. This would suggest further losses, and the similar candle for Friday only puts an exclamation point on this fact. A close below the parity level would only have me adding to this sell position as the global risk in general looks to be cooling. In fact, almost all of the “riskier currencies” look ready to fall coming into this week. I am not buying at all presently.