Aussie Reaches Near 200-Day EMA

If we turn around and break down below the bottom of the candlestick from Thursday, I’m not going to hesitate to buy the US dollar, but I would not necessarily do it here.

• The AUD/USD currency pair rallied a bit Friday as we continue to climb ever so slightly.
• This is an interesting candlestick and move during the day because we had formed such a massive shooting star from the Thursday session.
• At this point, the market looks as if it is stalling a bit, but it is rather impressive given the fact that the US dollar has strengthened so much against other currencies.

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Resistance at 200-Day EMA

Looking at this chart, the 200-day EMA sits just above, and that could offer a little bit of resistance. The 0.72 level above there opens up the possibility of resistance as well, and it’s likely that we will see sellers come back into this market before it’s all said and done. That being said, it comes down to the bond markets and whether or not traders believe that the Federal Reserve is going to continue to tighten. It’s interesting that they don’t, because it shows just how much the credibility of the Fed has been destroyed.

The Australians are more likely than not going to tighten a bit as well, but they also have the added concerns about China slowing down. The market is highly sensitive to the Chinese economy, due to the fact that the Australians are the biggest supplier of copper and other metals to the Chinese. That being said, the market is likely to continue to see noisy behavior, and although the Aussie has been a bit of an outlier when it comes to fighting the strength of the greenback, it does not necessarily mean that I want to jump in and start buying it.

If we turn around and break down below the bottom of the candlestick from Thursday, I’m not going to hesitate to buy the US dollar, but I would not necessarily do it here. I think we would probably see the euro and the British pound fall much further, so I am more or less going to use this market right now as an indicator. However, I would also point out that if we broke above the 0.72 level, then it’s likely that we go much higher. At that point, it would be a very strong turn of events. The last couple of candlesticks have been relentless, and if you believe in the bullish flag, there is the possibility that we could go all the way to the 0.74 level.

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