The Australian dollar rallied a bit during the trading session on Friday, but ultimately this is a market that is struggling to break out above a major resistance barrier just above. With that being the case, you should keep an eye on the 0.70 level which is a massive resistance barrier that extends all the way to the 0.71 handle. There is a lot of noise in that region, so I think it is going to take quite a bit of momentum to finally break through there. Furthermore, the Australian dollar is highly levered to the Chinese economy, so that is something to pay attention to as we have a lot of crosswinds when it comes to the global economy, and of course the US/China trade situations.
AUD/USD Video 06.07.20
At this point, it is probably a scenario where we will fade the occasional exhaustion candle, but if we can break down below the 0.68 level, then the market could go down to the 0.6675 handle which is an area where we have seen significant resistance previously, so with that it should end up being supportive. Furthermore, we have recently seen the 50 day EMA cross above the 200 day EMA, so that is somewhat supportive, but we could break down below there and go looking towards the 0.65 level.
Quite frankly just comes down to the overall risk appetite out there and if we get some type of major negative shot, that is probably all it would take to finally break this pair back down. Alternately, if we get extraordinarily good news we could break out. Above the 0.71 handle, the market then probably is more of a “buy-and-hold” scenario.
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This article was originally posted on FX Empire
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