The Australian dollar rallied a bit during the week, reaching towards the 0.7250 level, an area that has been important more than once. That’s an area that I suggested could be resistance ahead, and it did in fact cause it. If we can break above that level, then I think we begin the next phase of the recovery, a move towards the 0.7350 level. Looking at the chart, you can make an argument for the hammer from the previous week being a potential bottom to this market, it of course we break above the top of that hammer helped pursue that case further.
AUD/USD Video 14.01.19
The Australian dollar is of course very highly sensitive to the Chinese economic situation, and as a result it’s likely that the Aussie will be highly tied to whether or not we get some type of agreement between the Americans and the Chinese. There have been good signs of cooperation, but I think once we get some type of confirmation of an agreement, the Australian dollar will take off to the upside. After all, this would be good and welcome news for the Chinese economy which has been suffering, and on the other side of the equation is the Federal Reserve which is starting to step away from the idea of a continuation of interest rate hikes. If they confirm that, and of course we get some type of agreement between the Americans and the Chinese, that will be the perfect storm for higher levels. Otherwise, I think we bounce around and try to form a bottom at the 0.70 region.
This article was originally posted on FX Empire
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