AUD/USD Forecast: Aussie Pulls Back to 50-Day EMA

Christopher Lewis

The month of April ended up forming a candlestick very much like the month of March, suggesting that we will continue to struggle to go higher.

The Australian dollar pulled back a bit during the trading session on Friday to reach down towards the 50-day EMA. This is an area where we have seen interest in the past, and the fact that we pulled back during the Friday session to that area should not be a huge surprise. However, it is worth noting that we are closing at the very bottom of the range, so it does make sense that there could be a little bit of follow-through. If the Australian dollar follows through from here, I think there are plenty of places underneath where buyers could return.

One thing worth noting about the Australian dollar is that we have such a massive barrier of resistance near the 0.78 handle. The 0.78 handle has been like a brick wall for this market, and it is obvious that we have failed yet again. That being said, I do think that eventually we will probably have to make a longer-term decision, but it is worth noting that the candlestick for February was a shooting star, followed by a very similar candlestick for the month of March. The month of April ended up forming a candlestick very much like the month of March, suggesting that we will continue to struggle to go higher.

That being said, there are multiple areas as I mentioned previously that could offer support. The first one is the 50-day EMA, but even after that we probably have support in the region of 0.76, and most certainly will in the region of 0.75. If we were to break down below there, it could kick off a massive move down to about the 0.70 level based upon the monthly charts. Even if we were to pull back towards that area, there should be no doubt that the market is still technically in an uptrend, and that could just be a nice pullback. If we break down below there, then who knows where the Australian dollar will end up?

The other possibility is that we finally break above the 0.78 level and go looking towards the 0.80 level. That is an area that is massive resistance on the monthly chart, and if we were to clear that region, we could see this market become more of a “buy-and-hold market. In fact, we could be looking at another 10 handles to the upside.

AUD/USD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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