The Australian dollar has broken down significantly during the week, reaching down towards the crucial 0.70 level. That is an area that has been important more than once, and as a result it is likely that we will continue to see a lot of volatility in choppiness in this area. The question now is whether or not the Australian dollar can hold the support level? I do not necessarily know that I would be a buyer here based upon this level alone, and the length of the candlestick suggests that we probably see more selling pressure eventually. On a daily close below the 0.70 level, one would have to think that the market is going to drop even further.
AUD/USD Video 28.09.20
The 50 week EMA is currently near the 0.6850 level, so I would be paying attention to that as a potential target on a breakdown. In the short term, it would not surprise me at all to see this market bounce a bit, only to offer selling opportunities later. Do not get me wrong, if you want to buy the US dollar, there are much easier places to do it than the AUD/USD pair. Honestly, this pair falls you are probably better off buying the USD/CAD pair instead of this one as it is also the “anti-commodity trade” without the strength of China backing the non-US currency.
This is not to say that you cannot make money shorting the Australian dollar, just that you will have an easier time in other markets. The Australian dollar is most certainly overbought for the last several months, but that does not necessarily mean you should be shorting it.
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This article was originally posted on FX Empire