The Australian dollar has gone back and forth during the course of the week, as we are testing a major area of noise. This was an area we had broken down from rather significantly in the past, so the question now is whether or not we can keep up this type of momentum? I do not know that we can, so do not be surprised at all to see sideways action for a few weeks to say the least. I believe that the 0.70 level underneath will offer a significant amount of support, and I do expect a lot of buyers to return if we somehow dipped down to that level.
AUD/USD Video 10.08.20
The Federal Reserve continues to flood the market with greenbacks, and at this point it is obvious that the US dollar is being unwound from a long-term standpoint. Ultimately, I do think that you can buy the Australian dollar on dips, but I think we may have some work to do to get through this area just above. Ultimately, I think it happens, but you can see just how parabolic this move is been, and these types of moves cannot go on forever.
With that, I like the idea of picking up value as it occurs, but I also recognize that simply buying at this high level with huge positions will be a great way to lose money. If we can break above the top of the candlestick from the week, that would be yet another sign that we will eventually break out to the upside but obviously we have a lot of work to do to get to the upside. Longer-term, I fully believe that we go to the 0.80 level.
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This article was originally posted on FX Empire
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