At this point, if we break down below the hammer from last week, then the market could go flushing much lower.
The US dollar has been the main currency known for a while, but the Aussie dollar has turned around to show signs of life. At this point, the AUD/USD currency pair looks as if it is trying to figure out where to go next, with so much out there causing noise that it’s difficult to get overly aggressive one way or the other. It is worth noting that the market will continue to pay close attention to the 0.69 level, as we have seen a lot of noisy behavior.
The 50 Day EMA is sitting just below the 0.70 level, and it looks as if it is going to cause a significant amount of resistance if we get anywhere near there. After all, the market is likely to continue seeing a lot of noisy behavior, therefore it’s also worth noting that a lot of technical traders will be in that general vicinity. Furthermore, we have the 0.70 level sitting just above it, and that of course will cause quite a bit of psychological resistance as well. At this point, I’m waiting for an opportunity to short this market, either based upon a long red candlestick, or perhaps an exhaustion candle.
The Reserve Bank of Australia has had an interest rate hike recently, but at the end of the day, most central banks around the world are continuing to raise interest rates as well, therefore I think it is all a matter of who’s going to be raising rates going forward. The market will continue to see more favorable action toward the US dollar and the US economy as it is the strongest one in the world. The market is starting to look at the commodity markets as well, which also have a major influence on what would happen with the Australian dollar.
At this point, if we break down below the hammer from last week, then the market could go flushing much lower. If we break down below the bottom of the hammer, then it’s likely that we could drop rather drastically. The market dropping from there could open up a move down to the 0.65 level at the very least. On the other hand, if we break above the 0.70 level, then it’s possible that the market could go to the 0.72 level, although I do not have that as a base case scenario.
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