The Australian dollar first fell a bit in Tuesday’s trading session, but then exploded for the third consecutive day, showing signs of life again. The Australian dollar is of course a base currency and therefore it follows the risk appetite. Under these conditions, the market should continue to experience great volatility, and it should be noted that the 61.8% retracement level of Fibonacci has shown signs of resistance. In the end, I think it will be a very difficult step up, but it certainly made some pretty decent progress during the day on Wednesday.
Withdrawals at this point could be viewed as buying opportunities, but we obviously need strength in the stock markets around the world, as they can show whether there is more risk appetite or not. If there is, then the Australian dollar should continue to rise. However, if there is some type of risk appetite selling, it makes sense that the Aussie will fall from here. The Australian dollar is strongly linked to China, so you have to pay attention to the Chinese situation itself. If the global supply chain is to collapse, the Australian dollar is one of the first places traders will punish currencies. That being said, the question is not so much whether the Australian could roll from here, but whether he went too far ahead of him.
The level of 0.60 below is a massive support, and therefore the breakout of the market below would of course be an extremely negative sign. At this point, I think you would think that it just comes and goes, depending on the latest whim of the market, so keep in mind that you have to be careful about the size of your position, because even if we take off for upward, it is still contrary to the general trend. The Australian dollar has rebounded nicely, but we still have a major downtrend, so this is something to watch out for. Ultimately, expect volatility to continue, as headlines continue to happen to you fairly quickly. There have been big movements in the stock markets showing signs of strength, but there is still a huge argument to be made for the possibility of a bear market rally, something that will sell quite drastically, leaving purchases in US dollars.