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Christopher Lewis
AUD/USD daily chart, December 26, 2018

The Australian dollar initially tried to rally during the trading session on Monday but found enough exhaustion above to turn around to form a slightly negative candle. We are decidedly in a downtrend and that makes sense considering that the Australian dollar is so highly levered to the Chinese economy. The Chinese economy is struggling a bit as the global slowdown continues. The tariff or between the Americans and the Chinese certainly won’t help as well. I think at this point; the Australian dollar is trying to build up the necessary momentum to break through the 0.70 level but it will take a certain amount of wherewithal to make that happen.

AUD/USD Video 26.12.18

In the meantime, I suspect that it’s easier to fade rallies as they occur, with the 0.7250 looked at as the “ceiling” in the market. The more economic and global headlines that spell trouble, the worst this pair is going to do. The Australian housing market is slowing down, and perhaps that is a sign that the Australian economy itself is starting to struggle. I believe that overall the market will continue to be choppy and volatile, but as long as there are concerns out there, the negative and downside should be what you’re looking for. If we do break down below the 0.70 level, the market will probably go looking towards the 0.68 handle, which has been supportive in the past on longer-term charts. A break down through there opens the door to a much bigger move.

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