Australian Dollar Plunges Below 200 Day EMA

The Australian dollar initially tried to rally during the trading session on Tuesday but gave back gains to plunge below the 200 Day EMA. That being said, there is a significant amount of support just below so be interesting to see whether or not the market can turn around. If it does, then we could see another attempt to break above the 0.74 level.

All that being said, it should be kept in the back of your mind that the market is one that tends to move on risk appetite, as the Australian dollar is so highly levered to the commodities markets. Furthermore, the US dollar is considered to be a safety currency, so a lot of people will be looking towards the greenback in times of uncertainty.

AUD/USD Video 09.03.22

If we do break down, the 0.72 level will be the next major area of interest, followed by the 0.71 level. On the upside, the market is going to eventually go looking towards the 0.75 level, assuming that we get more of a risk on move. In this general vicinity, I would anticipate a lot of resistance showing up and therefore it would be a bit of a ceiling in the market going forward.

However, the market is going to be choppy, to say the least, so I would be cautious regardless. The markets will continue to be extraordinarily volatile and therefore position sizing will become crucial in order to preserve your trading account, which is the first thing you should be thinking about at all times, and most certainly in times like this. Volatility presents opportunities, but it also can cause major problems.

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