Daily Forex Reports | by FX Empire | Sunday, 17 January 2016 05:57 UTC
The AUD/USD pair fell during the course of the day on Friday, breaking the bottom of the shooting star that formed on Thursday. I doing so, we ended up forming a fresh, new low, which of course is a very negative sign in general. You have to keep in mind that although the gold markets are rallying presently, the reality is that a lot of the world is looking at the Australian dollar through the prism of Chinese credit issues and stock markets falling apart. After all, the Australians provide China with most of its raw materials and if there’s some type of situation in China that is going to cause a bit of an economic slowdown, this of course will have a massive effect on the Australian economy itself.
Beyond back, there is a bit of a hesitation to do anything along the lines of buying a so-called “risk asset, and the Australian dollar is certainly considered to be one of those. With this, we feel that rallies at this point in time will continue to find sellers, especially near the cluster just above at the 0.70 level. Once we broke down below the bottom of the uptrend line a couple of weeks ago, the downward pressure really started to build up. That of course is very negative, and at this point in time we at FX Empire expect this market to eventually reach down to the 0.65 level. That’s not to say that we won’t get bounces from time to time, but those should turn out to be selling opportunities on signs of exhaustion as not only do you have bearish pressure on the Australian dollar itself, but you also have the US dollar being favored as the world is rushing to buy US Treasuries at this point.
Going forward, we don’t really see a scenario in which we are starting to buy this market again, but a longer-term supportive candle would do the trick. At this point time though, we continue to sell again and again as the bearish pressure is certainly picking up.
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