The Australian dollar has rallied a bit during the trading session on Monday but gave back the gains to turn around and form a bit of a shooting star. This is obviously a very negative sign of things, as we have gotten a bit overextended. This exhaustion at the 50% Fibonacci retracement level is a sign that perhaps the Aussie has gotten far too ahead of itself. If we can break down below the 50 day EMA, it’s likely that the market will then start looking towards the 0.68 level. Ultimately, if we were to break above the 0.69 handle, then the market is likely to go higher. This would be a very bullish sign, but it seems to be very unlikely at this point.
AUD/USD Video 17.09.19
I would expect choppiness, and of course a lot of confusion in the process. All things being equal I like the idea of fading rallies, and we are starting to see signs of the Aussie dollar being overdone. If that’s going to be the case then pay attention to the attitude of stock markets and other risk assets as a to give you an idea as to how the Aussie should go. Beyond that, the Australian dollar is also very sensitive to the US/China trade relations, and therefore it’s a bit of a mixed bag from time to time. Headlines will continue to cause issues, so keep that in mind.
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This article was originally posted on FX Empire
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