The Australian dollar has had a wild ride during the trading session on Thursday, initially falling apart but then it’s spiking much higher to form a resilient looking candle. It’s obvious that the market has gotten ahead of itself in trying to destroy the Aussie, and it should also be noted that there seems to be a bit of a recovery day going on in the markets. With that being the case, it would make sense that the US dollar would lose a little bit of momentum, and quite frankly nothing can go in one direction forever.
AUD/USD Video 20.03.20
By doing so, the market has formed a nice-looking hammer and that hammer of course suggests that we are trying to form a little bit of a bottom. I think it might be a bit early to suggest that, but the reality is that the Australian dollar is oversold regardless of what metric you use. I believe that the 0.60 level above will offer a significant amount of resistance, so I would anticipate a bit of selling in that area. If we can clear that level, then the next major area will be somewhere near the 0.62 level where we had seen a minor gap previously.
Keep in mind that the Australian dollar is highly levered to China and Wuhan has finally stop producing new cases of coronavirus. That in and of itself might be reason enough for longer-term value investors to get involved. I wouldn’t necessarily be a long-term buyer here, but it looks like a bounce is probably somewhat eminent.
This article was originally posted on FX Empire
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