The Australian dollar fell during the day on Thursday to test major support at the 0.74 level. This is an area that has been both support and resistance lately, going back the last couple of weeks. When you look at the longer-term charts, we have formed a couple of nice looking hammers on the weekly timeframe, and therefore I think it makes sense that we continue to see a lot of demand underneath. However, keep in mind that this pair is somewhat risk sensitive and of course is highly levered to what’s going on in Asia. As long as there are threats of a trade war between the United States and China, that of course will put a bit of a damper on the longer-term outlook.
As a general rule, I believe that the Australian dollar trades right along with China and of course Gold. I think at this point it’s likely that we will try to bounce from here and go looking towards the 0.7440 level, as we simply consolidate between a couple of supply and demand zones. We need some type of clarity going forward to make a more significant move, but you short-term traders may like this range. If we were to break down below the 0.74 level, the market would probably reach down to the 0.7375 handle. Overall, I am bullish, but I also recognize that you need to be very cautious as headlines of course will move this market back and forth.
AUD/USD Video 18.07.18
This article was originally posted on FX Empire
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