The Australian dollar tried to rally at the very open of the trading session on Thursday but has since fallen apart.
Quite frankly, this is going to be a very difficult pair to trade, mainly due to the fact that the Reserve Bank of Australia is likely to continue to hike rates in the future but at the same time, the Australian dollar is highly sensitive to risk appetite.
And with everything that is going on in the Middle East and the noise in general economically, it makes a certain amount of sense that we would continue to see this as a situation that ends up being very noisy. The best thing you can do in a situation like this is perhaps turn to the technical analysis because it simplifies the entire problem.
Technical Levels and Market Indicators
The 50-day EMA currently sits at the 0.6930 level so I would assume that between there and 0.69 would be a rather supported region. If we break down below there, then I think the bottom probably falls out for a moment. With this being the case, I look at the market through the prism of a buy on the dip attitude at least at the moment, but if we do start to fall apart, the Australian dollar will fall quite rapidly, but other currencies will probably get beat down even more.
Top Regulated Brokers
So, with that being the case, I am watching this very closely. If we do get a bounce and a little bit of risk appetite, then a revisit of the 0.7150 level is possible. Breaking above that opens up a bigger move. This is a market that I may not trade directly but I may use to give me an idea as what to do with other commodity currencies such as the New Zealand dollar and maybe give us a little bit of a heads up as to where the US dollar is going in general.
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