(MENAFN- Daily Forex)
- The AUD/USD currency pair has dropped rather heavily to kick off the week on Monday, slamming into the 0.70 level.
- This is an area that I will be watching very closely because it is a large, round, psychologically significant figure, and an area that I think a lot of people will be paying close attention to.
- We have seen a lot of support in that area in the past, right along with resistance.
- “Market memory” comes into play rather drastically in this general vicinity.
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The size of the candlestick is somewhat impressive, and therefore you need to take that into account. However, this is also a lot of noise underneath here so you also would have to assume that there will be people willing to get involved and try to pick up value in the Aussie if they are truly bullish on risk appetite. One of the main things that kicked this off during the Monday session was the fact that Chinese numbers came in rather lackluster. Retail sales missing by almost 3% does not bring in a lot of confidence when it comes to the Chinese economy. Remember, Australia is highly dependent on the Chinese economy, so if the Chinese economy does poorly, so will the Australian economy.
Underneath, we have the 50-day EMA , and that of course comes into the picture as well, as the market pays close attention to that quite often. The 0.6939 level is where it currently is, so breaking down below that will open up an attack on the 0.69 level, and then possibly breaking down below there to reach the lows again. I don't know that it will happen easily, but it's obvious that there is still plenty of volatility in the market, so you have to be very cautious on the whole.
If we were to break above the 200-day EMA, it opens up the possibility of a move above the 0.72 level, an area that has a certain amount of historical importance and of course psychology attached to it as well. Either way, I think the only thing you can count on is seeing a lot of fake-outs in both directions , and a lot of accounts destroyed in this pair as it has bucked the trend when it comes to how it behaves against the US dollar.
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