AUD/USD Forecast – Australian Dollar Recovers After an Initial Pullback

AUD/USD Forecast Video for 05.07.23

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has initially pulled back during the trading session on Tuesday, but then turned around to rally toward the 50-Day EMA. The 50-Day EMA is of course an indicator that a lot of people pay attention to, and the fact that it is flat tells you that the market really has no overall directionality in the short term. Ultimately, when you look at the Australian dollar, you can see that the 0.66 level has been important in the past, and has offered support yet again this past attempt to break down through it.

Above, the 0.68 level is an area that we have seen significant resistance previously, but we also have to worry about the 200-Day EMA between here and there, and therefore I think it does bear importance, and therefore you need to pay close attention to it. All things being equal, this is a scenario that the Australian dollar continues to find it in, going back and forth to show signs of indecision.

Keep in mind that the Aussie is highly correlated to the commodities market, so therefore you will have to pay close attention to it as well. All things being equal, this is a situation where I think you also have to pay attention to not only the commodity markets but also Asia itself. The Australian dollar is going to continue to be very noisy in this environment, as we have so many different moving pieces. With that being the case, I think you need to be very cautious with position sizing.

If we were to break back down below the 0.66 level, it would open up a move down to the 0.65 level, where we had bounced from previously. After that, then the market goes down to the 0.64 level, the original “measured move” of the consolidation area. If we were to break above the 0.68 level, then it opens up the 0.69 level, and then eventually the 0.70 level. All things being equal, we will continue to see a lot of choppy behavior, and therefore you have to be very cautious with your position sizing.

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