AUDUSD Forecast Video for 15.05.23
Australian Dollar vs US Dollar Technical Analysis
The Australian dollar fell during the trading session on Friday, continuing the selloff that started on Thursday. Furthermore, when you look at the Wednesday candlestick, you can see that the market formed a perfect shooting star at the top of the overall consolidation area. Because of this, it’s likely that we continue to see downward pressure until we get to the bottom of the range, which is closer to the 0.66 level. This also would jive well with concern around the world about global growth, as the Australian dollar is so highly levered to commodities, and commodities, of course, are levered to growth.
Furthermore, the US dollar is backed up by a central bank that is very hawkish, and although the Australians recently did a surprise rate hike, there are still a lot of concerns about not only Australia but China. Remember, the Chinese economy has a major influence on what happens with the Australian dollar, so it all ties together quite nicely. If central banks around the world are going to remain very tight with monetary policy, that will harm risk appetite, which in effect has a negative effect on the Aussie itself.
If we were to break down below the 0.66 level on a daily close, that would open up further selling. The “measured move” would have this market dropping another 200 points down to the 0.64 level. However, the same could be said if we turn around and take out the top of the shooting star on Wednesday, as the market would then be looking for another 200 points, rising all the way to the 0.68 level. Until then, the market is likely to continue to trade in a very range-bound manner, as it looks like we are heading back and forth just as we have over the last several months. However, once we finally do break out, it should be a rather clear signal, and a lot of traders will probably jump into the market to take advantage of the “FOMO trade.”
Until then, it’s probably best to look at this as a nice range bound market that you can use your range bound trading strategies on. Furthermore, you probably need to be reasonable in your position size because once this market does break out of this range, it will be explosive.
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This article was originally posted on FX Empire