- The AUD/USD has gone back and forth during the trading session on Friday as we continue to hover around the crucial 0.67 level.
- The crucial 0.67 level is an area that has been important more than once, therefore it does make quite a bit of sense that we have a bit of a fight on her hands in this general vicinity.
- The 0.67 level has also been important for several years, and the last time we broke through here, we saw a massive plunge in the Aussie.
Keep in mind that the Australian dollar is highly levered to the commodity markets and of course the Chinese mainland. Both of those look rather weak now, so I do think that the Aussie only has a certain amount of time before it starts to sell off again. Fading short-term rallies will be the way I approach this market, and it should not be a huge surprise to see that we did not simply plunge lower heading into the weekend. People do not want to be holding too big of a position heading into a weekend that you cannot react, although it should be noted that they are probably going to be more comfortable holding dollars than anything else.
Look At Rallies As Shorting Opportunities
The 50-Day EMA sits at the 0.69 level and is shrinking. That’s where we pulled back from last time, and it suggests that we have a bit of a barrier there. The size of the candlestick from the Tuesday session shows just how much negativity there is, so I think it’s difficult to imagine that we are going to suddenly take off to the upside for a bigger move. I believe it’s more likely than not that every time we rally, people will be shorting.
Looking at the longer-term chart, I suspect that we could go investigate the 0.65 level, maybe even lower than that. We have a lot of noise between here and there, so make sure that you are position size accordingly. Yes, the US dollar is a little overbought, but clearly, in the scenario that we are in right now, it’s difficult to imagine going against the momentum, and of course, the idea that the US dollar falling apart anytime soon is a bit of a stretch. We have the interest rate hike coming next week, and of course a press conference, so that’s worth paying attention to.
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