- The AUD/USD currency pair was all over the place on Friday as we continue to struggle with the 0.70 level.
- The 50-day EMA sits just below there as well, so it is a bit of a magnet for price.
- I think given enough time, we have to make a bigger decision, but right now it’s obvious that the Australian dollar is not quite ready to take off, despite the fact that we have seen a bit of selling pressure against the US dollar.
Wait for an Impulsive Candlestick
You can see that the market has been very noisy and difficult to deal with, and I think you need to be cautious with your position size, at least until we get some type of clarity. That clarity will more than likely be due to an impulsive candlestick in one direction or the other that kicks off a bigger move. What I would pay attention to is the Friday candlestick, because if we can break out of the short-term range of the day in, then it’s likely that we will get follow through.
Keep in mind that a lot of people have read into the Federal Reserve announcement, statement, and press conference that the Federal Reserve is ready to pivot. Whether or not that’s the case remains to be seen, but it’s not a given. The interest rates in America have dropped over the last several days, but that does not necessarily mean that we have changed the entire trend. The market is more likely than not going to continue to take its cues from what happens to the 10-year note.
If we can break above the 0.7050 level, then it’s likely that we will go much higher. If we can continue to break above there, then it is likely that the market could you’re looking to the 200-day EMA. Alternately, if we were to break down below the bottom of the candlestick for the session on Friday, then it’s likely that the market could go looking to the 0.68 level underneath. After that, the market could go down to the 0.67 level, an area that has been important multiple times on longer-term charts. Breaking through that area opens up the possibility of a complete meltdown, perhaps dropping down to the 0.60 level afterward.
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