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The Australian dollar initially tried to rally during the week but found the 0.79 level to be far too resistive to continue going higher. We rolled over, broke down below wicks from the previous 3 weeks, which of course is a very negative sign. We are currently testing the 61.8% Fibonacci retracement level, which coincides with previous resistance. If we break down below the bottom of the weekly candle we just formed, I believe that the market goes down towards the uptrend line just below, closer to the 0.76 handle.
There is also a good chance that we break down below to the 0.75 level, wiping out the entire move. I believe that the market is going to continue to go higher longer-term, but the question is where do we start bouncing from? Being very patient and diligent will be the way to go, and it looks as if this point we are still in the longer-term uptrend in channel. I think that the market will continue to be sensitive to risk appetite out there as the Americans have imposed tariffs on steel and aluminum. There is risk of a potential trade war, so if gold rallies, that could be reason enough for this market to bounce. However, the Australian dollar is a little bit of a risk asset as well, so I think volatility is the one thing you are going to be able to count on.
AUD/USD Video 05.03.18
This article was originally posted on FX Empire