The Aussie dollar has broken above the 50 day EMA during trading on Wednesday to clear the 50 day EMA, something it has not been able to do for quite some time. Having said that, when you look at the longer-term charts there are still a lot of concerns just above and quite frankly there are some bearish signals coming out of the Chinese equity markets. If that is going to pick up steam, that will certainly work against the value of the Aussie sooner or later. Because of this, I do think that you need to be very cautious about buying this pair based upon this sudden move.
AUD/USD Video 15.04.21
It is worth noting that there has been a shooting star for both February and March in this market, and that does suggest that there could be some trouble ahead. That being said, I think what we are looking at here is a scenario where traders are trying to discern whether or not there is a catalyst to finally break above the 0.80 level above. That is massive resistance on the monthly charts, so it should be paid close attention to. Ultimately, when you see a couple of shooting stars in a row on the monthly chart, you should take notice and realize it does not happen that often.
Do not get me wrong, I am not expecting the Australian dollar to completely fall apart, but I think a pullback, bigger than the one that we have seen, is a very real possibility at this point. Obviously, you will want to scale into a position to the downside. However, if we break above the 0.78 level then I think we will make another run at the 0.80 level. I would expect more noise.
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