AUD/USD Forecast: Aussie Continues to Hold the Line at 0.75

Christopher Lewis

When you look at the area below, we have just formed a major “W pattern”, which of course is a very bullish sign. 

The Australian dollar fell a bit on Friday, reaching down towards the crucial 0.75 level. This is an area that obviously has been important for a while, and the fact that we held there heading into the weekend does suggest that traders in general are comfortable holding on to this currency going forward. This was helped by a better-than-anticipated retail sales figure overnight, and the fact that interest rates in Australia are rising rather rapidly.

To the downside, I think there is plenty of support all the way down to the 0.74 handle, where the 200-day EMA sits above. If we can stay above there, then I think it is only a matter of time before the momentum pushes the Aussie higher, just as we had seen a major attempt to do so on Thursday. At this juncture, we are getting relatively close to a potential “golden cross”, which is when the 50-day EMA crosses above the 200-day EMA. That is a longer-term buying signal for trend traders, so it does make sense that we see longer-term traders paying close attention to get into this market.

When you look at the area below, we have just formed a major “W pattern”, which of course is a very bullish sign. The W pattern would open up the possibility of a measured move to the 0.78 handle above, an area that has been important multiple times. Keep an eye on the commodities markets, because if they continue to look good, the Australian dollar will get a bit of a boost from the “knock on effect” that happens naturally. Beyond that, you need to pay close attention to the Chinese economy as well, because it is starting to show signs of wear and tear, but so far it looks like the Australian economy, or at least the Australian currency, is ignoring that. As we get the massive reopening trade, it does make sense that a lot of the things that Australia provides for the world will continue to be in demand. If we were to turn around andbreak down below the 0.74 level, I would have to take a look at the other side of the trade.

 

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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