The Australian dollar has broken down significantly to reach towards the 0.66 handle. This is a market that should give you plenty of opportunities to sell it on the short-term rallies, as quite frankly there’s no reason for the Aussie to bounce for a significant amount of time. The Australian dollar is highly sensitive to the Chinese economy, which of course has been decimated by the coronavirus situation.
AUD/USD Video 24.02.20
It’s not until the virus gets under control that I think that the Australian dollar will have a shot at having a stronger rally. That doesn’t look to be the case in the short term, so I suspect that what we are looking for here is the opportunity to short the market every time it rallies. Signs of exhaustion will be looked at as opportunity, but if we ended up breaking through the bottom of the candlestick, then I think the market will simply accelerate to the downside, going to look for the 0.65 handle.
Longer-term, it would not surprise me at all to see the Australian dollar continue to grind down towards the 0.63 level, which was a major bottom during the financial crisis. The 0.63 level of course is massive support due to that, and if we broke down below there the bottom would fall out. I don’t necessarily think that’s what’s going to happen, but it is always a possibility. I suspect that the market is probably going to be negative, but we are definitely far into the downtrend. The easy money has already been made.
This article was originally posted on FX Empire
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