The AUD/USD currency pair has seen volatility in recent trading sessions, initially showing signs of negativity before turning around and showing signs of life again. However, it is likely that the Australian dollar will run into resistance soon, as the 0.67 level has been recognized as both support and resistance by the market.
Selling Pressure Is Likely to Return
Although the candlestick from the Monday session pierced the 0.67 level, there was also a lot of selling pressure in that area. Just above that level, there was consolidation that lasted for roughly a week before a significant breakdown occurred. This suggests that there may be major issues from time to time, and while the market looks short term bullish, selling pressure is likely to return eventually, especially as the US dollar strengthens during this time of trouble.
Breaking down below the bottom of the candlestick for Tuesday would be negative, opening up the possibility of a drop back down to the 0.66 level, followed by 0.65 and 0.63. Traders believe that the Federal Reserve is going to loosen monetary policy sooner than they say, which increases the likelihood of sudden and erratic moves when the Federal Reserve refuses to follow suit.
- The Federal Reserve's actions have caused uncertainty and volatility in the market, as traders expect the central bank to come out and bail everybody out.
- This is due to the fact that it’s been nothing but liquidity for 14 years, and now inflation has shown up.
- Most traders have no idea how to deal with this, and the Federal Reserve is so far behind the curve that they have lost all credibility.
It is important for traders to stay informed and be prepared for sudden shifts in the market. Position sizing will be crucial, as exhaustion signs indicate a good opportunity to start selling again. The Australian dollar may continue to see volatility in the short term, and traders should be cautious and consider all factors before making any decisions.
At the end of the day, the Australian dollar may experience resistance at the 0.67 level, and there is a high likelihood of sudden and erratic moves due to uncertainty surrounding the Federal Reserve's actions. Traders should remain cautious by keeping their position size reasonable and what will more likely than not be a very choppy Forex market over the next several weeks.
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