The Australian dollar has gone back and forth during the course of the week to present a fairly neutral candlestick. This is a good sign, at least so far as the market look like it was ready to rollover. That being said, we still look a little stretch, so I suspect that we probably have more volatility ahead of us, because quite frankly if for no other reason than gravity has to be obeyed occasionally.
AUD/USD Video 08.02.21
Part of what may have This market somewhat subdued is that it was an employment week, meaning that the nonfarm payroll announcement came out on Friday. This of course has the market a bit skittish at times, and of course beyond that we have to worry about the stimulus situation in the United States. It looks like the Democrats may use reconciliation, which essentially is a way of fast tracking stimulus through Congress. There are ramifications to that, but they are beyond the scope of a Forex article. Ultimately, it should be good for the Aussie as it is a commodity related currency, but nonetheless we still have to worry about whether there is actual recovery. With the jobs number in America coming in at 50,000 added for the month of January, that is not exactly impressive.
The question now is whether or not we need to go sideways or if we can continue to go higher. I suspect we probably have more work to do, and therefore longer-term traders are probably going to be better served simply waiting for the market to grind sideways for a little while longer before buying into it. When you look at the weekly chart, you can see just how overbought the conditions have become.
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