AUD/USD Signal 26/12: Threatening Major Breakout (Video)

(MENAFN- Daily Forex) Potential signal:

• On a WEEKLY close above 0.6750, I am a buyer with a stop loss of 0.6650 and a target of 0.69 above.
• The Australian dollar has broken above the 0.67 level, but the biggest problem I have with this move at the moment is that it is in very low liquidity, and it is not exactly blowing through that level.
• I think the decision in the Australian dollar will have to be made at the end of the week. That makes sense because Thursday is Christmas, but Friday is a shortened session.

If we can perhaps stay above 0.6750, then I think it is worth going long the Australian dollar. There are some fundamental reasons to think that the Aussie may do fairly well. For example, the RBA looks as if it is pretty stable in its monetary policy outlook, while the Federal Reserve is expected to cut rates.

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The problem with that is the market continues to think that the Federal Reserve is going to start cutting rates rapidly, and the economic data does not suggest that. The latest move in the Australian dollar has been a little over-exaggerated, so I do think you have a bit of an issue with momentum.

At the end of the day, I think it is the end of the day on Friday that we get maybe a little bit more clarity. If we cannot stay above the 0.67 level, then you have real concerns that the ceiling is still in place. On a move above the 0.6750 level on a daily close on Friday, then you have a real shot at this pair possibly even going to 0.69.

EURUSD Chart by TradingView

I do expect choppiness, and I also recognize that volume is a major issue this time of year. The only thing you can control is how much you risk; please keep that in mind.

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