The Australian dollar broke down significantly during the trading session early on Monday, making a fresh, new low which is typically a very negative sign. However, we have turned around to form a bit of a hammer by the time the Americans had hit mid-day trading, as we are below the 0.68 handle. That is an area that has been crucial more than once, and at this point if we do break above the hammer from the Friday session, then it’s likely that we turn around and rally. It isn’t to say that we rally for very long, because quite frankly this is an extraordinarily negative market.
The reason that this market has been so negative of course is the fact that the Australian dollar is highly levered to the Chinese economy. We continue to see a deterioration between the United States and Chinese trade negotiations, so at this point I think that rallies will end up selling off. The 50 day EMA above of course is starting to slope drastically lower, which is pictured in red on the chart.
The alternate scenario of course is that we simply break down below the lows from the trading session on Monday, which of course is extraordinarily negative and could send this market down to the 0.65 handle. At this point, I believe that the US dollar continues to strengthen, so if we do get a rally here, there are plenty of opportunities to sell on the chart, the most obvious one of course is the 50 day EMA, but I also recognize that the 0.6850 level might cause resistance before we get there. Either way, I have no interest in buying the Australian dollar as it has been so negative of late, but of course we have been a bit overdone. Simply waiting for an opportunity to sell from higher levels makes the most sense.
The reason that this market has been so negative of course is the fact that the Australian dollar is highly levered to the Chinese economy. We continue to see a deterioration between the United States and Chinese trade negotiations, so at this point I think that rallies will end up selling off. The 50 day EMA above of course is starting to slope drastically lower, which is pictured in red on the chart.
The alternate scenario of course is that we simply break down below the lows from the trading session on Monday, which of course is extraordinarily negative and could send this market down to the 0.65 handle. At this point, I believe that the US dollar continues to strengthen, so if we do get a rally here, there are plenty of opportunities to sell on the chart, the most obvious one of course is the 50 day EMA, but I also recognize that the 0.6850 level might cause resistance before we get there. Either way, I have no interest in buying the Australian dollar as it has been so negative of late, but of course we have been a bit overdone. Simply waiting for an opportunity to sell from higher levels makes the most sense.