The Australian dollar had rallied after a stronger than anticipated employment figures on Thursday, slamming into the 200 day EMA. However, we pull back from there and have since settled near the 0.6840 level. That being said, the market still has a significant amount of support underneath in the form of the previous downtrend line. That downtrend line should now offer support, as it is a fairly obvious indication of market structure. If we can break above the 200 day EMA above, it would be the Australian dollar recovering and continuing the attempt to change the trend. However, if we were to break down below the 0.68 level, then it’s likely that the market will break down significantly from there.
AUD/USD Video 27.01.20
At this point, this is a market that is in the midst of making some type of decision, and that of course is very difficult to do when it comes to markets. In fact, these trend changes can take weeks, if not months at times before they take a longer-term direction. It is a little bit messy in its directionality right now, but it is holding firm right where it needs to. It’ll be interesting to see where we go next, because the downside will be somewhat limited by the fact that the area just below was where we were after the financial crisis 12 years ago. In other words, we are at extraordinarily low levels right now, and as long as the US/China trade situation doesn’t fall apart again, one would have to think that there is much more room to the upside than the down.
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This article was originally posted on FX Empire
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