The Australian dollar initially tried to rally during the trading week but ran into a lot of resistance near the 0.63 handle. We then sliced through the 0.60 level and proceeded to crash towards the 0.55 handle. By bouncing from there, it suggests that there is a significant amount of buying pressure down there, but ultimately, I do think that the level will retest that area.
Longer-term, the fact that we have broken below the 0.60 level is of course a very negative sign. If the market is in fact going to continue to see negativity due to a slowing down of the global economy, it makes quite a bit of sense that the Australian dollar continues to sell off. Ultimately, I believe that the Aussie is probably going to go looking towards the 0.50 level, where it should form a longer-term and major base. I think that we are getting relatively close to a nice “buy-and-hold” situation in this market that could last four years.
AUD/USD Video 23.03.20
With all that being said, you need to keep your position size relatively small as volatility is here for the foreseeable future. I believe at this point the market will continue to be very noisy, so therefore I do think that we get an opportunity to short this market from higher levels. I have no interest in buying the Australian dollar, at least not anytime soon but when the coronavirus deaths start to slow down and the infection starts to dissipate, it’s very likely that this market will have a nasty bounce higher.
This article was originally posted on FX Empire
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