- The AUD/USD has fallen during trading on Thursday, as we continue to see a lot of noisy behavior around the world.
- Ultimately, this is a situation where the Aussie is falling victim to concerns about global growth, which of course makes sense considering that the economic numbers coming out of most countries leave a lot to be desired.
- Furthermore, you also must keep in mind that the Australian dollar is highly sensitive to the Chinese economy, which is reopening but at the same time has to deal with the fact that there is slowing demand.
You’ll notice that there is a well-defined channel on this chart, and we have recently pulled back from the top of it. Furthermore, it’s also worth pointing out that the 0.70 level is right there in the same area, so it all ties together quite nicely. We formed a shooting star during the day on Wednesday to show signs of hesitation, and Thursday was all about following through. With, it looks to me like the market is going to continue to be very noisy, but I also would not be surprised at all to see the 200-Day EMA offers little bit of support underneath, and then again at the 50-Day EMA, as it has basically been following the overall channel.
Choppiness Ahead
If we were to break above the top of the Wednesday candlestick, that would obviously be bullish for this pair, perhaps allowing the market to go all the way to the 0.72 level over the next several weeks. It’s going to take quite a bit of effort to make that happen, so I’m not looking for it in the short term. Ultimately, if we break down below the bottom of the channel, that opens quite a bit of selling pressure for the Aussie, perhaps sending it down to the 0.66 level.
Either way, I think we are going to see a lot of back-and-forth choppy behavior, and that’s how you must look at it. I’d be cautious with my position sizing because there are a whole host of people out there suggesting that the Federal Reserve is going to slow down, while the Federal Reserve continues to tell them differently. In other words, it’s a lot of noise.
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