The Australian dollar initially pulled back during the trading session on Wednesday, pulling back towards the 50 day EMA before bouncing a bit. I think that a lot of what we are looking at here is that the markets are ahead of themselves, trying to anticipate good news coming out of China as far as the US/Chinese trade talks are concerned. There is supposed to be some type of announcement on Thursday, which does of course suggests that perhaps there is good news coming. However, the next question you have to ask yourself is whether or not it’s priced into the market already?
AUD/USD Video 10.01.19
I believe that the 0.7250 level above is going to be very crucial, because the 200 day exponential moving average is just above it, and it has been important in the past. I think the next several days will be crucial as to where the Australian dollar goes next, and if we do get good news out of China, we could get a bit of a short-term pop. However, I think the real shock could be if something negative comes out, which will send this pair much lower. On the longer-term charts, the area between the 0.70 level and the 0.68 level has been massive support. Because of this, we may be setting up for a trend change, especially considering that Jerome Powell has backed off his hawkish stance as of late. This doesn’t mean that we won’t see a pullback, but I think at this point unless bad news comes out of the US/China situation, or at least some type of disappointment, this pair may continue to grind higher.
This article was originally posted on FX Empire
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