Potential signal:
- I am a seller right here.
- I would have a stop loss at 0.6675 and aim for 0.6480
AUD/USD continues to press into major resistance near 0.66, with the broader structure still range bound. Despite recent strength, economic signals and upcoming Fed decisions suggest the pair may struggle to extend gains without exhausting momentum.
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The Australian dollar has shown itself to be strong yet again during the trading session on Thursday, but at this point, it's worth noting that we are digging into pretty significant resistance, and I'm not a huge fan of going long here. That being said, you have to look at this through the prism of a market that is overstretched, and despite the fact that it looks like everybody is betting that the United States dollar is going to zero, as interest rates are going to be cut to zero.
The reality is a much different pill to swallow. The US economy is going to strengthen in the early part of next year to all leading indicators. And now we find ourselves near the 0.66 level, where we really start to see resistance in the Aussie. If you look at the longer-term chart, you can see what I see. This is a sideways market that has a lot of trouble staying above here.
Range-Bound Behavior and Key Levels
The first signs of weakness probably send this market down toward the 0.6550 level, possibly even the 0.65 level. The interest rate decision of the United States, coming out on Wednesday of next week, will have a major influence on this market. But I think the Aussie is going to continue to be a place where money goes to die. In other words, it's range bound.
I think you've got a situation here where it's only a matter of time before we roll over because we spent two weeks stretched out. There is an argument to be made for a pro-gold trade, but that's a correlation that died many years ago. So don't listen too much to that because you can see what the Australian dollar has done while the gold market has gone straight up in the air. So, it's obviously not as correlated as it once was or even correlated at all.
Copper prices have risen, so that helps the Aussie dollar in theory. But really at this point, you're looking for signs of exhaustion that you can start shorting again. If we were to break above the 0.67 level, however, then the Aussie can really take off.
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