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The Australian dollar has rallied significantly during the course of the trading session on Friday, breaking above the crucial 0.57 level. That being said, we still have a lot of technical areas above that could cause headaches, so I'm not entirely convinced but I would also specify that the Australian dollar looks like it could continue a little bit higher in the short term.
Technical Analysis
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The technical analysis for this
market is very negative, but the short-term move of course is very positive. I think the 50 Day EMA above continues to cause a lot of issues, and therefore I think you would have to be cautious about getting overly exposed to the upside right now. Furthermore, you also have to keep in mind that the 0.5850 level above is a major resistance barrier, so although we could rally all the way to that region, you are still essentially“swimming upstream” if you are in fact doing that.
After all, the market has been in a downtrend for quite some time, and I think that is something that you will have to keep in the back of your head, as we have seen quite a bit in the way of negativity when it comes to the Aussie, and of course strength when it comes to the US dollar. The Australian dollar is heavily influenced by the Chinese economy, which has been lackluster to say the least. As long as that's going to be the case, the Aussie dollar is going to be vulnerable, and we will have to watch what happens in China to get an idea as to what happens with the Australian dollar.
EURUSD Chart by TradingView
It's worth noting that even if we do break above the 50 Day EMA, or myself, I will just simply be waiting for signs of exhaustion. If we break above the 0.5850 level, the market is likely to continue going much higher, so I can be patient in this AUD/USD market , as I recognize that if that were to happen, we probably have much further to go.
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