Potential signal:
- As we rise in this pair, I would be selling near the 50 Day EMA.
- Essentially 0.6315, with a stop at 0.6233, and a target at 0.6140
The Aussie dollar has initially fell during the trading session on Tuesday but then turned around to rally as we've seen the US dollar weaken a bit. That being said, I still think there's a nice setup to short this market just above, but I think you also have to be a bit patient. Keep in mind that we have services PMI coming, but more importantly, we have the jobs numbers coming out of the United States. And therefore, this might be a Friday story.
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We may have a week where people just take a break after all of the tariff drama to open up the week and sit on the sidelines. I don't know if I would blame them. However, I believe there is a set up here just waiting to happen and therefore I'll be watching the 50-day EMA very closely. It currently sits right around the 0.6310 level, and I think anything in that area will probably attract a certain amount of technical selling.
This is also true due to the fact that China just got new tariffs levied on it, and if people are paying attention, the loophole that they used to use for goods under $800 to be duty-free has been closed. So, this will definitely have an effect on the Chinese economy, which is already hurting a bit. At the end of the day, it doesn't really matter.
Its Been a Strong Downtrend
At first glance, you can see exactly what's going on here. This is a market that's been in a downtrend for quite some time, and unless we see some type of massive change overall, I think this is a market that stays in a downtrend. That doesn't mean it doesn't bounce from time to time, and that's essentially what I'm watching right here. Now, it's a matter of trying to pick up cheap US dollars.
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