Ultimately, I do think that a lot of the US dollar selloff is done, at least for the time being.
- The AUD/USD currency pair has fallen rather hard during the trading session on Friday, as the market has turned around to reach towards the US dollar in terms of safety.
- The Non-Farm Payroll number came out at 518,000 jobs added for the month of January, instead of the expected 188,000 anticipated.
- At this point, the market is likely to continue to see a lot of noisy behavior, but this type of nasty red candlestick is something that is very rarely done in a vacuum.
Noisy Market Over the Next Days
If we break down below the bottom of this candlestick on Monday, I suspect that we will then test the moving averages underneath. If you take down the 200-Day EMA could send this market down to the 0.67 level, but it’s very unlikely that the area gets targeted easily. However, we could get some type of panic because the massive candlestick certainly means that a major shift in attitude has come about. Rallies at this point in time should end up showing an opportunity to start shorting again, at the first signs of exhaustion. I don’t really have an area where I’m looking to buy this market, but if we were to break above the highs of the Thursday candlestick, then I would have to stand up and take a moment to pay close attention to the buyers.
I think this ends up being a very noisy market over the next several days, but I also believe that this is more likely than not just the beginning of more selling pressure. The 0.67 level is a major area on longer-term terms, and therefore I think it’s worth paying close attention to whether or not we can slice through. If we can, then it opens up a huge air pocket underneath that could send this market much lower.
In general, I think this is a situation where a lot of damage was done on Friday, and it’s likely that we would see most people being very cautious about the Australian dollar as the market will have to take into account whether or not the global economy is getting ready to take off, or if we are in fact going to see the Federal Reserve get its wish. Ultimately, I do think that a lot of the US dollar selloff is done, at least for the time being.
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