The Australian dollar has rallied a bit during the trading session on Friday, to test the cluster that sent the market back down in September. That being said, it is not only the 50% Fibonacci retracement level, but it is also the 0.69 level which could cause a bit of “market memory” as it was both support and resistance. Beyond that though, the 200 day EMA sits above and it is starting to drift a bit lower. Because of this, it is only a matter of time before the market finds exhaustion that I can sell into.
Don’t forget that this pair is very sensitive to the US/China trade talks, and at this point it’s possible that the headlines continue to throw this pair around. Granted, the Federal Reserve has been liquefying the market through repo operations, and that has driven down some of the demand for the greenback, but there is still a whole ton of issues that could come into play and push risk appetite lower. It’s not until we break above the 200 day EMA that something significant has actually happened in this pair, and even then you could make an argument for the 0.70 level being massive resistance.
Looking at this chart, to the downside the 0.67 level is massive support, as it has now formed a bit of a “W pattern”, but it hasn’t kicked off quite yet. That being said, the market certainly looks as if it will struggle to get below there. All things being equal, I think we are trying to form a larger range to trade back and forth from. If the 0.69 level was to offer itself as massive resistance, then we would said it will into a 200 point range. This might be a good place to go back and forth and await some type of resolution to the trade war.
Don’t forget that this pair is very sensitive to the US/China trade talks, and at this point it’s possible that the headlines continue to throw this pair around. Granted, the Federal Reserve has been liquefying the market through repo operations, and that has driven down some of the demand for the greenback, but there is still a whole ton of issues that could come into play and push risk appetite lower. It’s not until we break above the 200 day EMA that something significant has actually happened in this pair, and even then you could make an argument for the 0.70 level being massive resistance.
Looking at this chart, to the downside the 0.67 level is massive support, as it has now formed a bit of a “W pattern”, but it hasn’t kicked off quite yet. That being said, the market certainly looks as if it will struggle to get below there. All things being equal, I think we are trying to form a larger range to trade back and forth from. If the 0.69 level was to offer itself as massive resistance, then we would said it will into a 200 point range. This might be a good place to go back and forth and await some type of resolution to the trade war.