- The Aussie dollar has rallied a bit during the Friday trading session, but we're still in the same range that we have been in for what seems like a lifetime.
- The market has been trading between the 0.63 level on the bottom and the 0.65 level at the top.
- It is trying to lean to the upside as the 0.64 level has been support all week.
But really at this point in time, I think we need to ask questions of the Australian economy in and of itself. After all, it's highly levered to China. And if China has problems, and it certainly looks like it does, we could see Australia suffer as a result. I think a lot of what's going on is that traders just simply don't want to take on too much risk in an environment where trade war and tariff moves are all the headlines. Really, we're not focusing on anything other than that right now. And it's probably worth noting that most central banks out there are in fact moving in the same direction. They are looking to cut, but some at different speeds. It isn't like you have a clear cut situation where Australia is going to raise rates when America cuts. You don't have that here. So therefore, you get a bit confused.
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Where We Are Coming From
We did see a massive rally after a massive drop, but since then we've tried to work off the froth, but we're just taking a lot of time. When you look at the longer term chart going back five or six years, you can see we are basically in an area that has been noisy more than once. However, I do think there is the possibility of going long here if we get a significant break of the 0.65 level. If we break below the 0.6350 level, then I think the Australian dollar finds a lot of trouble.
Potential signal: I am a buyer of the AUD/USD IF we can close above 0.6520 on a daily basis. I would have a stop loss of 0.64, and a target of 0.67 above.
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