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Australian Dollar Sells Off in Risk Aversion

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The Australian dollar has broken down significantly during the trading session on Friday as we continue to see a lot of negativity and fear around the world. As long as that is going to be the case, this is a market that I think will continue to see fear prevail. All things being equal, this market will continue to be one of the better ones to short, but that does not mean that it will go straight down. We could get a significant bounce occasionally, but those bounce it should end up being a nice selling opportunities.

AUD/USD Video 25.01.22

At this point, I fully anticipate the Australian dollar to go looking towards the 0.70 level underneath. That is an area where I think a certain amount of psychology comes into play and people get involved. I have no interest in trying to buy this pair anytime soon, and if we break down below the 0.70 level, we could see the bottom fallout pretty quickly. Having said that, the occasional rally will probably be a nice selling opportunity more than anything else.

After all, we have been in a downtrend for a while, and now that we have had this nice rally to offer more value in the greenback, I think a lot of people are going to take advantage of that. That being said, keep in mind that Australia is a proxy for China, so you will have to pay close attention to what is going on in the mainland. The size of the candlestick for the day is rather telling in the sense that it seems convincing and convicted. With this, I look at short-term charts to start selling.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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