The Australian dollar fell during the trading session on Thursday, as we continue to see a lot of noisy behavior around the world. After all, we are in a position where the Australian dollar falls victim to concerns about global growth, which of course makes sense considering that the economic numbers coming out of most countries are not impressive. Furthermore, we also have to keep in mind that the Australian dollar is very sensitive to the Chinese economy, which is reopening, but at the same time, it has to deal with the fact that there is a slowdown in demand.
You will notice that there is a well-defined channel on this chart, and we have recently pulled back from the top of it. Furthermore, it is also worth noting that the 0.70 level is in the same area, so it all correlates quite nicely. We formed a shooting star during the Wednesday session to show signs of indecision, and it was all about the follow-up Thursday. With that being said, it looks to me that the market is going to continue to be very noisy, but I would not be surprised at all to see a little bit of support underneath at the 200 day EMA, and then again at the 50 EMA, because it has been basically watching the channel.
If we were to break above the top of the candlestick on Wednesday, that would obviously be bullish for this pair, and could allow the market to go to the 0.72 level over the next several weeks. However, it is going to take a lot of effort to make that happen, so I do not anticipate that we will see it in the short term. Ultimately, if we were to break down below the bottom of the channel, that could create a lot of selling pressure for the Australian dollar, possibly sending it down to the 0.66 level. Either way, I think we are going to see a lot of choppy behavior back and forth, and that is how you should be looking at the market. I would be cautious as far as position size is concerned, because there are a lot of people out there who suggest that the Federal Reserve is going to slow down, while the Federal Reserve continues to talk differently. In other words, there is a lot of noise.
Graph generated by platform TradingView
