The Australian dollar has shot straight up in the air during the trading session on Wednesday, breaking through a short-term trendline, but we are approaching the crucial 0.66 level which I think is going to attract a lot of attention. After all, we had seen a lot of selling in that area, so it does make sense that the market is ready to face a serious challenge. Furthermore, the 200 day EMA sits just above and will obviously attract a lot of attention as well. That is an area that I think will have a lot of longer-term traders coming back in, not to mention the fact that the 0.66 level was where we had sliced through previously and saw a major capitulation.
AUD/USD Video 21.05.20
Quite frankly, this is an area that is going to determine where this market goes for the longer term. If we were to clear the 200 day EMA and by extension the 0.66 handle, the Australian dollar is likely to continue going much higher over the longer term. That does not mean that it will be easy but given enough time we could go to the 0.70 level. It really does not matter whether or not the economic reality continues, because quite frankly the markets have completely ignored it. With that in mind, the Australian dollar is the major “risk on currency” that a lot of FX traders look towards. Having said that, we still have some work to do but we are right there knocking on the door of a major trend change.
This article was originally posted on FX Empire
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