The Australian dollar fell a bit on Wednesday to reach down towards the 0.70 level before turning around. At this point, the 0.73 level above has offered resistance yet again, as we have seen multiple times over the last several weeks. Beyond that, we also have the 50-day EMA sloping lower and sitting just above there, so it makes sense that we would see resistance there as well.
At this point, I think the Australian dollar continues to suffer at the hands of Chinese issues, and currently there is just too much out there to worry about to think that we are going to suddenly see the Australian dollar explode to the upside. As you can see, the market is likely to see resistance just above, and the fact that we closed lower than we did the previous session does suggest that perhaps the downward momentum is starting to pick up ever so slightly. Because of this, I am still very much interested in shorting this market, especially if we can break below the bottom of the candlestick for the Wednesday session. However, one of the most important thing to keep in mind is that the non-farm payroll number comes out on Friday in the United States, and that will have a major influence on where this pair goes due to the US dollar.
The market breaking above the 50-day EMA could convince me that the markets going to try to go looking towards the 0.74 handle, which is the top of the overall structural consolidation that we had been in previously. Breaking that then has me thinking of going long. Not only will we break above that previous consolidation area, but we would also clear the 200-day EMA, which will attract a certain amount of attention as well.
Keep in mind that the US dollar is considered to be a safety currency while the Australian dollar is considered to be more commodity and risk-related than many other currencies. Looking at this chart, this is a market that I think will continue to be choppy over the next couple of days, so I would be cautious about putting too big of a position on between now and that jobs report that will throw the market around in the short term.
