The Australian dollar initially tried to rally during Wednesday’s trading session, but found enough resistance in the 50-day EMA to reverse and show signs of weakness again. That being said, we are also at the top of significant support, so I think the Aussie will continue to be very boisterous in the area. I also find this very interesting given that yields in the United States are starting to fall again, but the Australian doesn’t seem to be able to take advantage of it.
AUD / USD Video 08.04.21
If we do break below last week’s lows, I think it will open a huge move down, perhaps about 400 pips or so. This is because we have formed shooting stars for both the February and March candles. It is quite rare to see a pair of shooting stars in a row that do not have any effect on the market. Because of this, I am very wary of taking a long position on this pair, as I think there will be many fears in the future.
If yields in America start to pick up again, that is likely to be enough for the market to decline. On the other hand, if we started to rally from here, I think we will probably have the 0.78 level as a kind of gatekeeper for higher prices. The 0.80 level is a massive resistance barrier that I think extends to the 0.81 level and a clearing that will look more like a buy and hold market. This would not only be recapturing the main barrier, but cutting through these two previously mentioned shooting stars.
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