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Australian Dollar Testing Trendline

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·2 min read
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The Australian dollar has fallen during the trading session on Friday to show signs of hesitation and risk off attitude yet again. We pierced the 0.72 level, which is a psychologically important figure, but it looks like we are trying to hold some type of uptrend line from the previous channel being formed. At this point, if we break down below the 0.7150 level, that will smash through the channel, and more than likely send the Aussie dollar looking towards the 0.70 level.

AUD/USD Video 24.01.22

As ugly as that sounds, the reality is that the 0.70 level is an area that we have been at recently and has been a bit like a magnet for price over the longer term. When we break through that level though, it would be an extraordinarily negative sign of events to come. I say this because the Australian dollar breaking through that level would in fact be a very negative turn of events as far as risk appetite is concerned, and therefore we would not only see the Aussie fall, but we would more than likely see other risk appetite based markets get hammered as well. Because of this, I would be very cautious about trying to get overly aggressive in either direction, because we are teetering on something bigger. With this, I believe that it is important to keep your position size small in any market, including the Australian dollar.

All that being said, if we can break above the 0.73 level, I would be a buyer of the Aussie dollar as it would be a breach of such a large resistance barrier. Because of this, I do believe that it is probably only a matter of time before we have to make a bigger move, triggering a nice trade.

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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