The AUD/USD has had a very rough Thursday session as we have found the market plunging down to the previous uptrend line of the overall channel. At this point, we will have to make a serious decision as to where we are going longer-term, and we are threatening the 0.67 level as I write this article.
Underneath there, we also have the 50-Day EMA which is rapidly approaching, so there is a certain amount of an argument to be made for technical support in this area. If we break down below all that, that could be very negative for the Aussie dollar, which does make a certain amount of sense considering that the global economy is slowing down and Jerome Powell was adamant about being hawkish during the press conference after the FOMC meeting on Wednesday.
Keep Your Eyes on the Commodity Markets
- While China is reopening, the reality is that China's reopening has probably already been priced into the Australian dollar.
- After all, we have seen a big move higher, but when you look at the longer-term charts, it’s just a nice bounce in a bear market.
- The 200-Day EMA seems to be offering a bit of a barrier as well, so this all ties together quite nicely. Whether or not that holds is a completely different question, but I think it is something to at least take a closer look at.
Keep in mind that the Australian dollar is highly influenced by commodity markets, so that is something that you need to keep your eyes on as well. If we continue to see a lot of negativities around the world, it’s very likely that this pair could break down significantly. In that scenario, I do think that the Aussie could find itself all the way down to the 0.65 level rather quickly. Do not get caught this time of year being too big in any one position, and make sure that you leave your stop losses rather quickly. While this could follow part, the reality is that the market could shoot straight back up in the air against you based upon some type of random news flow, as liquidity will start to disappear next week. All things being equal, this has been a nice bounce in a bear market, but it may be coming to an end.
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