AUDUSD - Short Covering Rally Makes Sense:
Enter your emailI think a short covering rally makes quite a bit of sense, but in order to change the trend, we would have to make a massive amount of headway, chewing through multiple barriers such as the consolidation area I just mentioned, the 50-Day EMA, and the 0.67 level, which had been supported previously.plunged initially during the trading session as we have seen a lot of volatility in the currency markets overall.
The CPI numbers in the United States has come out as 0.4% month over month, instead of the projected 0.2%. By doing so, it had the US dollar spiking in strength, but later in the day we had Wall Street come in and start to talk about narratives again. Because of this, it looks very much like the market is ready to bounce, but quite frankly picking bottoms is a great way to lose money.The hammer shape does suggest that we could bounce significantly from here, but I think there is a lot of noise above that could come back into the picture. The 0.64 level is an area where this noise begins, and it extends all the way to at least the 0.66 level. Somewhere in that area, I would love to see signs of exhaustion that I could start.
Regardless, I think a short covering rally makes quite a bit of sense, but in order to change the trend, we would have to make a massive amount of headway, chewing through multiple barriers such as the consolidation area I just mentioned, the 50-Day “Market memory” comes into the picture in that area, and therefore think a lot of sellers will be waiting, assuming that we can even get to that area.
Keep in mind that the Australian dollar also needs a healthy commodity market to truly get going as well.
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