The Australian dollar rallied significantly during the day on Friday, reaching towards the 200 day EMA. We broke towards the 0.72 handle, an area that is rather psychologically important. The 200 day EMA of course is very important for a lot of longer-term traders, so at this point it’s likely that we are going to continue to see a little bit of selling in that area. However, I think that there is plenty of support underneath at the red 50 day EMA, and more importantly below at the 0.70 level.
AUD/USD Video 15.04.19
The 0.70 level underneath is a major support level for the longer-term charts, and I think it extends down to the 0.68 level. That being the case, we could see this market would be a “buy only” situation. Longer-term, this is going to react to the US/China trade relations more than anything else, and of course possibly the Chinese stimulus and whether or not it works in the mainland. Australia is a major supplier of raw materials for the Chinese economic machine, so as China goes, so does Australia.
If we can break above the 0.7250 level, at that point I think we will have essentially did a bit of a trend change, and it could go racing towards the 0.75 level above. That is an area that should continue to be monitored. If we break above there I think even the big money will have known that everything has changed and then the uptrend for the longer-term cycle can begin. All things being equal though, I think short-term trading gives us an opportunity to buy the Aussie at lower levels.
Please let us know what you think in the comments below