The Australian dollar rallied significantly during the open on Monday, but as you can see, we have a lot of selling pressure just above from the last couple of weeks. The candlestick is somewhat impressive looking, but when you look at the last several sessions you can see that the market has consistently sold off near the 0.69 handle, so I do think that we are more than likely going to run into a bit of exhaustion. Furthermore, there are a lot of concerns out there when it comes to the coronavirus spreading in China, and one of the easiest ways to express that concern is the short the Australian dollar.
AUD/USD Video 23.06.20
If we break down below the bottom of the range for the Monday session that should continue quite a bit of selling, perhaps reaching down towards the 0.6675 handle. That is where we see the 50 day EMA getting ready to try to cross the 200 day EMA, forming the so-called “golden cross.” That could also offer a bit of support, but it is also a bit of a magnet for price. Because of this, I believe it is another reason that we may get back to that level. If we were to break down below there, then the market probably drops down to the 0.64 level, and beyond.
Keep in mind that the Australian dollar had been overbought for quite some time, and parabolic to boot. With that in mind, at the very least we probably need to go sideways in order to digest the gains, but with a whole slew of negativity out there, it is easy to see where people would run back to the US dollar.
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This article was originally posted on FX Empire
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