Australian Dollar vs US Dollar Technical Analysis
The Australian dollar initially fell during the trading session on Friday, only to turn around and show signs of life again. This has been a very wild day, as the market has turned around to test the 0.64 level. This is an area that I believe will continue to be a bit of an issue though, and therefore I think you have to look at this through the prism of whether or not momentum continues. Even if it does, I see plenty of areas above that could cause major issues.
Most notably is the 0.64 level, but we also have a previous trendline, and of course the 50-Day EMA coinciding right around the same area. In other words, I am looking for some type of rally that I can see signs of exhaustion to start selling. In this environment, I do believe that it is probably only a matter of time before the markets get shocked again, and we start running toward the US dollar.
Ultimately, this is a market that I think has to pay special attention to the growth prospects around the world, as the Australian dollar is so highly sensitive to commodity prices in general. Commodity markets have been a bit messy to say the least, and of course there are a lot of concerns as to whether or not there will be any global growth. Interest rates spiking in America occasionally doesn’t exactly help the situation either, so you have to look at it through that prism.
All that being said, I do think that you probably have to leave for signs of exhaustion to get involved, because quite frankly the market seems to be running on pure emotion at the moment. With that in mind, I’m very cautious but I’m waiting for short-term charts to show me that the market has run out of momentum. If and when they do, I will not hesitate to pick up US dollars “on the cheap.” It would take a significant break above the 0.65 level for me to start thinking about going long of this market, and right now I just don’t see the momentum.
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