The Australian dollar has rallied again during the trading session on Wednesday, as we continue to dance around the 0.65 level. At this point, the market is likely to continue to see a lot of volatility in this area but one thing that I cannot help but notice is that we are running out of momentum to the upside. Because of this, the market is likely to continue to see a lot of choppiness, and as a result it is a bit difficult to think that the Australian dollar is certainly going to explode to the upside. Furthermore, there is a lot of resistance at the 0.66 handle and beyond that at the 0.67 handle we have the 200 day EMA.
AUD/USD Video 14.05.20
If that is going to be the case, then it makes quite a bit of sense that we will eventually break down and all we need at this point is some type of negativity out there or negative event to have this market fall apart. Quite frankly, it looks to me as if we are trying to make some type of significant decision and it is probably only a matter of time before we make the move. Above the 0.67 level, then it is likely that the market could finally take off to the upside, perhaps kicking off a longer-term “buy-and-hold” phase.
On the other hand, if we break down below the 0.6250 level, that will kick off a major leg lower due to the fact that the market is clearly showing that level as a major support level. Either way, I do prefer the short term rallies that show signs of exhaustion in order to continue to fade the Aussie at this point.