The Australian dollar has rallied rather significantly during the trading session on Thursday, breaking above the 50 day EMA. By doing so, this would have brought more momentum into the marketplace, but we also have the recent highs which is at the 50% Fibonacci retracement level near the 0.69 level causing resistance. Ultimately, the Aussie is held hostage by the US/China trade talks, so it should not be thought of as overly surprising if we roll over from here. Beyond that, we are still very much in a long-term downtrend, so don’t be surprised at all if sellers step in rather soon.
AUD/USD Video 18.10.19
If we do break above that cluster that I have circled on the chart, then we will make a move towards the 200 day EMA. This would most certainly be a “risk on” move, but at this point this may be more or less a “knock on effect” from a potential Brexit deal, which will have a limited effect on the Aussie longer term. Because of this I am waiting for a sign of strength from a fundamental standpoint before I would be a buyer of the Aussie. Quite frankly, if it does turn around in a trend change, it probably has two thousand pips ago so missing the first 100 won’t be an issue.
Short-term trading probably will be dominant in this pair yet again, so looking for over extensions and selling exhaustion is my game plan for the Aussie going forward. It’s not until we break well above the 200 day EMA that I’m willing to get involved on the long side with any significant amount of money.
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This article was originally posted on FX Empire
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