The Australian dollar is obviously oversold when you look at the weekly chart. That being said, the market has taken a bit of a break over the last three weeks or so, and it suggests to me that perhaps we are probably best off looking for some type of pullback that we can take advantage of. On the chart, I think the most obvious spot would be somewhere in the neighborhood of the 0.75 handle. That is obviously a large, round, psychologically significant figure, and an area that we broke out of recently. With that in mind, I think that it is only a matter of time before buyers would get involved in that general vicinity.
AUD/USD Video 25.01.20
To the upside, if we can break out to a fresh, new high, then I think we go looking towards the 0.80 level. That is a large, round, psychologically significant figure that has a long history of being both support and resistance. Because of this, I think that we will almost certainly see a reaction to that area, just as it will probably be a bit of a magnet for price. Remember, the idea of getting to 0.80 is that commodities will continue to rally based upon stimulus in the United States, and of course other countries around the world.
The Australian economy is built on commodity production more than anything else so obviously they are very sensitive to things like copper pricing, iron, aluminum, etc. I have no interest in shorting this market, I think that it is only a matter of time before the buyers would come back to look for value underneath.
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This article was originally posted on FX Empire