The Australian dollar has tried to rally during trading on Monday but found enough resistance and the 50% Fibonacci retracement level to form a bit of a shooting star again. This suggests that we are going to rollover, and in fact if we do is very likely that we will reach back towards the lows again. This would be yet another consolidation area in a currency that is so highly influenced by the US/China trade talks. As those talks have been relatively quiet as of late, there hasn’t been bad news, but there hasn’t exactly been great news either.
In more of a “risk off” type of situation, the Australian dollar should find itself reaching towards 0.68 level initially which is where the 50-day EMA stands. If we were to break down below there, then the market is likely to go down towards the lows of 0.67 that had been reached just a couple of weeks ago. This would essentially be more consolidation in a market that is being held hostage by external forces. With that being the case, then it’s almost impossible to get overly excited about buying and the fact that the last couple of days have been so stretched to the upside, the pullback seems all but imminent and makes quite a bit of sense. Above all current trading there is also the specter of the 200-day EMA which is just crossing below the 0.70 level, adding even more bearish pressure in this market. Ultimately, fading short-term rallies probably continues to work, but I would not expect a lot of fireworks in this area, just a simple back-and-forth type of range bound situation as we await some type of resolution between the Americans and the Chinese, something that is probably going to take quite some time.
In more of a “risk off” type of situation, the Australian dollar should find itself reaching towards 0.68 level initially which is where the 50-day EMA stands. If we were to break down below there, then the market is likely to go down towards the lows of 0.67 that had been reached just a couple of weeks ago. This would essentially be more consolidation in a market that is being held hostage by external forces. With that being the case, then it’s almost impossible to get overly excited about buying and the fact that the last couple of days have been so stretched to the upside, the pullback seems all but imminent and makes quite a bit of sense. Above all current trading there is also the specter of the 200-day EMA which is just crossing below the 0.70 level, adding even more bearish pressure in this market. Ultimately, fading short-term rallies probably continues to work, but I would not expect a lot of fireworks in this area, just a simple back-and-forth type of range bound situation as we await some type of resolution between the Americans and the Chinese, something that is probably going to take quite some time.