The Australian dollar initially tried to rally during the trading session on Thursday but as you can see the 0.69 level has offered enough resistance to turn this market back around and send it towards the 0.6850 level. At this point, the Australian dollar has been overbought for some time and now we are starting to see the market drift a little bit lower. I cannot necessarily say that the trend is going to turn over again, but this is clearly an area where we could see that. Looking down from here opens up the possibility of going down to the 0.6675 level, an area that was important more than once, as it was previous resistance. The 200 day EMA is just below there as well, so that should offer quite a bit of support as well.
I think at this point we will continue to see a lot of noise in the Aussie dollar which makes quite a bit of sense considering that the Australian dollar is so highly levered to the Chinese economy which has a huge looming potential issue. With the coronavirus cases rising in Beijing, this is not a good look for the Aussie economy or where it might be going over the next several months. If that is going to be the case, that is something that people will have to pay quite a bit of attention to.
I do see a significant amount of resistance from the 0.70 level extending all the way to the 0.71 handle, and I think that is essentially one of those major areas on a chart that pops up every once in a while, determining the overall trend. At this point in time, I do not think we are going to break above there, and would not be surprised at all to see a significant pullback in order to build up that pressure, assuming that we even can. With that in mind, I am bearish of this pair, but I also recognize that you do not jump in with both feet. This is a pair that I think will continue to see noisy behavior, and something that you should pay attention to. We are making “lower highs”, so now the question is whether or not we can make “lower lows” in the short term. All things being equal, I think the 0.6675 level is calling.
