• During the trading session on Tuesday, we have seen the Australian dollar try to rally again, just as it did on the trading session for Monday.
• That being said, the 200 Day EMA above offered a significant amount of resistance, for the 2nd day in a row.
• Because of this, think you got a situation where the Australian dollar is starting to struggle with the idea of it going straight up in the air.

(Click on image to enlarge)

After all, the market had rallied rather significantly over the last couple of days, so it does suggest that perhaps exhaustion might be settling into the market.
 

Technical Analysis

I believe that the market is going to be facing a lot of trouble in this environment, as market participants will have to focus on the idea of whether or not the Australian economy is actually going to do that well in this type of scenario, with major tariff wars possibly affecting global trade. I postulate that they probably won’t benefit Australia, mainly due to the fact that the Australian so highly tethered to the Chinese economy as they provide a lot of the raw materials for that massive manufacturing economy to produce not only goods, but to go into the construction of that emerging market that has grown so much over the last couple of decades.

With that being said, it’s not a huge surprise to see that we have run out of momentum, but I’m cognizant of the fact that if we were to break above the highs of the last couple of days, we could send this market looking to the 0.65 level, and anything over there probably has more momentum building up in the market to the upside. However, I think it’s much more likely that we pull back from here, although I don’t necessarily expect to see some type of massive drop from here, perhaps we are just simply going to settle into the previous consolidation area, which means we could drop to the 0.62 level at the very bottom of that range. It’s worth noting that the 50 Day EMA sits at the 0.63 level, so retested that might be good enough as well.

More By This Author: