The market is going to continue to be a lot of noise between now and then, therefore if we break down below the 0.64 level, then I think it opens the possibility of dropping all the way to the 0.62 level.
The market is going to continue to be a lot of noise between now and then, therefore if we break down below the 0.64 level, then I think it opens the possibility of dropping all the way to the 0.62 level. A lot of this is going to come down to what Federal Reserve Chairman Jerome Powell has to say on Wednesday. It’s not necessarily a situation where I believe he’s going to change its direction, but if it were to be a very dovish statement after the interest rate hike, then that could send the Aussie dollar much higher. However, if Jerome Powell remains as hawkish as he has been, then it’s likely that this pair continues to go lower.
For what it is worth, it is probably worth noting that we are in a downtrend, so clearly the easiest route is going to be to the downside, as the overall trend has been ensconced for quite some time. In fact, the action on both Thursday and Friday suggests to me that we are going to have further downward pressure, and therefore I certainly think it’s probably going to continue to be a situation where civil exhaustion will come in and give you the occasional trade signal. I like the idea of fading short-term rallies, but I certainly like the idea of breaking down below the bottom of the range.
The alternate scenario is that we not only break above the 0.65 level, but also the 50-Day EMA. If we were to break above there, then the 0.67 area would more likely than not be the “ceiling” in the market as I look at it as a potential trend defining level. I suspect by the end of this coming week, we should have a lot of clarity.
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