The Australian dollar has initially fallen during the course of the trading session again on Wednesday, as the 0.73 level continues to offer a little bit of a battlefield between the buyers and sellers. We have dipped below there initially, only to turn back around and show signs of life again. With this being the case, the market is likely to see a lot of noisy behavior, and I certainly think at this point in time we are getting a bit oversold. A bit of a bounce makes quite a bit of sense, but I do not think that the trend can change quite yet.
AUD/USD Video 22.07.21
Breaking the bottom of the candlestick would of course be very negative, as it would open up the possibility of a drop towards the 0.70 level. That would be a very negative turn of events, as it would show that we are looking at more of a “risk off” type of world. The Australians continue to lock themselves down, so it does make a certain amount of sense that the Aussie dollar gets hit as a result.
Nonetheless, we may have gotten a little overextended, so I look at rallies as an opportunity to start selling again, at least until we break above the 0.75 level which I consider to be the “ceiling” in the market right now. I would expect choppy and volatile trading, but I still am looking for signs of exhaustion to start shorting again. It is also worth noting that the so-called “death cross” is getting ready to happen, when the 50 day EMA crosses below the 200 day EMA.
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This article was originally posted on FX Empire