By: Christopher Lewis
AUD/USD has been falling for some time now, and the pair had a particularly negative session on Friday. The pair looks as if the momentum is accelerating to the downside, and the 1.02 level giving way has certainly caught my attention.
The poor jobs number out of America on Friday certainly shook the markets up, and “risk off” is now the tone. The slowing in China is something that will also worry Aussie bulls as that country supplies so much “stuff” to China. With this in mind, we could be entering a commodity negative environment, which is of course negative for the Aussie on the whole.
The pair is one of the favorites of traders in the Forex markets to express global outlook, and with so many potential headwinds to the economy out there, this pair could really pay.
Bearish flag?
The breakdown below the 1.02 level is a significant moves that the markets will certainly take notice of. The markets could be bearish at the outset for the week as well as much of the world hasn’t been able to react to those poor jobs numbers.
The breakdown of the flag looks very bearish to me, and based upon the fact that the market closed so weak, I can’t help but think that the bears will continue to push this pair lower in the short term. The candle closing at the very bottom of the daily range is rarely reversed right away. Because of this, I feel the momentum will continue.
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The parity level will more than likely be supportive. This will cause a potential bounce, but that will more than likely be a selling opportunity. In fact, I feel that the bounces in general will be potential selling opportunities until we close above the bottom trend line of the bearish flag. As a side note, the flag suggests a move to 0.9650 going forward. Whether or not we get there is one thing, but either way – this pair should continue to fall in the mean time. I am selling the Aussie on a break of the lows from Friday, or rallies that show weakness on the shorter time frames.