The Australian dollar has broken down significantly during the early hours on Monday, but then turned around to show signs of stabilization. At this point, the market needs to determine whether or not we are forming an ascending channel, or are we simply building a bearish flag? At this point, I think that is going to be the biggest question from a technical analysis standpoint, so I would look at confirmation to the downside if we break down below the daily candlestick on Monday. All things been equal, if we do get that move, it is likely that the market could go all the way down towards the 0.7050 level.
AUD/USD Video 10.08.21
To the upside, if we can take out the 0.74 level, then it is possible that the market could go looking towards the 0.75 level after that. The 0.75 level is an area that I do believe will be even more resistive, especially as the 200 day EMA is sitting right there. Beyond that, the psychology of the 0.75 level would kind of come into the picture as well, so therefore I think that is going to be your “ceiling” in the market.
At this point in time, I believe in fading short-term rallies, because I do believe that the downward pressure is mounting. If the interest rates in the United States continue to climb, that should continue to drive up demand for the greenback, so that will also be downward pressure on this market. Beyond that, we also have to think about the risk appetite around the world, as the Aussie dollar is considered to be a “risk on currency.” All things been equal, it does look like we have further to go to the downside though.
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