AUD/USD Forecast: Aussie Finally Breaks Through Support

Christopher Lewis

This is a market that I think continues to be a “fade the short-term rallies” type of situation.

The Australian dollar initially tried to rally on Wednesday but gave back the gains in order to turn around and crash through the 0.72 handle. This is an extraordinarily negative move, and it is likely that we are going to continue going even lower. After all, I have been talking about this area just above the 0.72 handle as major support for a while, and now that we are broken through that level it is likely that we will go much lower.

Rallies at this point will continue to be sold into from what I can see, especially as the US dollar has been strengthening overall. The interest rates in America are rising, making the US dollar much more attractive, and it makes sense that we would see the Aussie fall from there. The shape of the candlestick certainly looks very bearish, and the fact that we are closing towards the bottom of the range certainly suggests that we are going to go much lower.

Underneath, I see the 0.71 level as a potential target, and then the 0.70 level underneath that would be an area that we need to go looking towards as well. The 0.70 level is a large, round, psychologically significant figure and an area where I would see a lot of potential for buying pressure. If we break down below there, then the bottom could fall out of this currency pair. On the other hand, if we turn around and take out the 50-day EMA on a daily close, then it could open up a move to much higher levels, perhaps even the 200-day EMA if not the 0.75 level.

This is a market that I think continues to find plenty of reasons to go lower, especially as we have seen so much in the way of negativity overall, and I think we will continue to see money flow away from riskier currencies such as the Australian dollar. This is a market that I think continues to be a “fade the short-term rallies” type of situation. The Aussie is also getting hammered due to the fact that there are a lot of concerns when it comes to the Chinese economy and credit situation as well.

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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