The Australian dollar has shown signs of strength during the last couple of sessions, perhaps in reaction to the midterm elections in the United States and the belief that the United States will have to negotiate a bit with the Chinese. Ultimately, I don’t think that’s true and I believe it is going to be a bit of a surprise down the road. The 200 day exponential moving average is above, as shown on the chart.
AUD/USD Video 09.11.18
Any exhaustive candle will probably bring the sellers back in, but if we break down below the downtrend line, the market will continue its downtrend. However, in the meantime it does look like the buyers are in control so you can’t fight here. I think what’s going to happen is we will get a bit of a relief rally but eventually questions about the Sino-American trade relations will come to fruition, and it will be realized that the Democrats don’t like the Chinese trade situation either, and that the market will turn around and start selling. In the meantime though, it does look as if the 0.70 level is massive support, and that should offer a bit of a bounce.
I do believe that breaking the trend line was a major change of events, but ultimately I think there is a lot of questions out there to worry about, and I believe that the overhead weight upon the market is still there so I am tentatively and short-term bullish, but longer-term we still have seen a lot of damage to the Aussie dollar. If you’re going to short the greenback, it’s probably easier to do it against other currencies. I also recognize that one bad headline could send this market right back down.
This article was originally posted on FX Empire
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