• The Australian dollar pulled back near the top of a long-standing range, with price action still dictated by global risk appetite and China-U.S. dynamics.
• Volatility remains elevated, but range-bound behavior keeps the broader outlook neutral for the time being.
   

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The Australian dollar fell again during the trading session here on Wednesday as we have reached an area of extension. At this point, the first thing that I would look at is the fact that the Australian dollar has been very range-bound while many other currencies have been extraordinarily strong against the U.S. Granted, recently we've seen a nice shot higher, but we saw that back in September as well and just ended up drifting lower.

I wouldn't be surprised at all to see that happen again, because, quite frankly, the Australian dollar is at the mercy of China and the United States. While there are obviously other factors out there, the reality is that most traders will treat the Aussie dollar as a reflection of risk appetite and global trade. With that being the case, I think this is a scenario where we just stay in the range.
 

Range Levels and Volatility Outlook

Perhaps going down to the 50-day EMA, maybe the 0.6550 level. Anything below the 200-day EMA opens up the possibility of a move down to the 0.64 level. With that being said, I do think we have a market that does offer quite a bit of volatility, but it also offers a lot of opportunity. If the Australian dollar wants to turn around and break above the 0.67 level, then we could go higher, possibly even the 0.70 level. With that being said, I remain neutral in this pair, but we are at the top of the range. Therefore, I have been shorting.

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