- The AUD/USD rallied a bit during the trading session on Tuesday only to find the 50-Day EMA to be too much to overcome.
- The market has been bearish for quite some time, and this candlestick looks horrible.
- There is a certain amount of support just below that could come into the picture, and I believe that the 0.67 level will be a significant battleground. If we break down below there, then it’s likely that we could go much lower, as it is a major support level on longer-term charts.
If we were to break down below the 0.67 level, the Australian dollar is going to fall rather hard. This will probably coincide with US dollar strength across the board, and it’s very likely that we will continue to see that happening. After all, the CPI numbers that came out on Tuesday suggest that the Federal Reserve is going to have to remain extraordinarily hawkish, and the US dollar will eventually overtake the Aussie. This candlestick is extraordinarily bearish, so I will look for a short-term rally that I can take advantage of and start shorting again.
Aussie Likely to Keep Losing Ground
We would have to see a complete shift in attitude to see the Aussie rally from here, but that doesn’t necessarily mean that we can break down right away. I think the 0.67 level is going to be very difficult to get below, so do not be surprised at all to see this market attempt to break down multiple times. I don’t know that it’s going to be easy, but regardless, once we get a daily close below there, I think we kick off the next leg lower.
If we turn around and take out the top of this candlestick, it’s possible we could go investigate the 200-Day EMA, but ultimately, I think that is going to take a lot to make that happen. After all, the 200-Day EMA is a longer-term indicator that a lot of people pay close attention to and has already acted as both support and resistance multiple times over the last year or so. I expect a lot of volatility, so be cautious about your position size but I certainly am not going to be buying anytime soon. While the RBA has been hawkish, everybody loves the dollar.
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