The Australian dollar broke down significantly during the week, reaching down towards the previous downtrend line which should now offer support. By doing so, we found buyers in the market bounced significantly. The market has been in a downtrend for quite some time, and now it looks as if we are trying to shift of momentum, which would make quite a bit of sense considering that the United States and China are getting ready to sign a trade deal, or at least the beginning of one, and that should help the Australian economy as the Chinese will be buying more raw materials.
AUD/USD Video 13.01.20
That being said, the US dollar is starting to get up at softer against a lot of different currencies anyway, so that could come into play as well. Wednesday and Thursday were relatively unchanged, and therefore it looks as if we have stabilized after a significant selloff. Oddly enough, most of that selloff had more to do with the US/Iranian tensions than anything else, and therefore the underlying fundamental drivers of the Australian dollar has been ignored, and this blip on the radar should continue to disappear. The 0.7025 level above is where the shooting star from the previous week had been formed, so if we can break above there it would be an extraordinarily bullish sign and get a lot of longer-term traders excited about buying the Australian dollar again. Otherwise, if we were to break back below the 0.68 handle it would be a continuation of the negativity that we have seen for so long.
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This article was originally posted on FX Empire
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