- During the trading session on Wednesday, we have seen the Australian dollar test the 200 day EMA again, which is just above the 0.64 level.
- We continue to see a lot of noise right around the 0.6440 level.
- The market has sold off pretty significantly after comments have suggested that the United States and China just aren't necessarily close to any type of trade deal.
And if that's going to be the case, eventually that hurts Australia. I think what most people have seen in the Australian dollar is a bit of a surprise and a bit of a slap in the face of normalcy because this was more about the US dollar and not necessarily about economic growth et cetera. This could continue to be the case in this pair, as well as many others.
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A Potential Ceiling
Now that we have flown up to this area, you can see that it's an area, this region has been important multiple times going back about three years. And the fact that we have the 200 day EMA here suggests that this is a nice binary trade. In other words, if the short works, then it works. We go down to the 0.62 level. On the other hand, if we can clear 0.65, that’s a major event. And that's what makes this chart so interesting to me.
I will say this though, we have to have exhausted a lot of buying power or perhaps seen a lot of short covering. That's actually what this is starting to look like to me. And if candlestick closes something like this, then there's an obvious level here where there is a lot of supply. So, pay close attention to it as there could be trouble in that region for the Aussie.
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