- The AUD/USD shot higher during the trading session on Wednesday but is starting to struggle again, as it looks like we are at the top of the trading range, and the up-trending channel.
- The 200-Day EMA was pierced, but that in and of itself is nothing new.
- After all, we have seen it pierced a couple of times in the last several weeks.
The Australian dollar has a huge correlation to the Chinese mainland, which of course looks as if it is slowing down. Keep in mind that most of the exports coming out of Australia to end up in China, especially hard assets in the mining sector. All things being equal, I think we continue to jump back and forth, as we wait for the FOMC Meeting Minutes late in the day on Wednesday, but we also have to worry about the job number on Friday. After all, it will give us an idea as to what the Federal Reserve is going to do, and that’s of course half of the equation here on this chart.
Noise Ahead
Underneath, the 50-Day EMA sits at the bottom of the candlestick from Tuesday, and of course where the uptrend line in the channel is at. If we break down below there, then it’s likely that we see a breakdown to the 0.66 level, maybe even the 0.65 level. On the other hand, if we break above the top of the trendline of the channel, then it opens up the possibility of moving to the 0.70 level, which of course is a large, round, psychologically significant figure.
Ultimately, this is a situation where I would expect to see a lot of noisy behavior, but as you can see, it is somewhat contained in the way that we are trading in this channel. Whether or not that remains the case, we will have to wait and see but it certainly looks as if the market is preferring more of a back-and-forth kind of choppy behavior. It is slightly positive, but I think by the end of the week we should have quite a bit more in the way of clarity, and that the next trade should be somewhat obvious. It’s also worth noting that the volume of the markets is probably still a little bit thin at this point.
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