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AUD/USD Forecast: Australian Dollar Likely to Continue Consolidating - 19 August 2019

By Christopher Lewis

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex...

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The Australian dollar tried to rally a bit during the trading session on Friday but as usual we have seen the 0.68 level cause a bit of resistance. This is a currency that is going to be highly influenced by the U.S.-Sino trade war which of course isn’t getting any better. With that being the case I like the idea of trading these short-term rallies, as it is only a matter of time before that trouble comes into play.

The 0.68 level has seen a lot of selling pressure; as you can see there are plenty of wicks just above there. Even if we close above the 0.68 level on a daily chart which of course would be bullish, I think it’s only a matter of time before we sell off again. My next area of selling would coincide with the 50-day EMA above, which is pictured in red. It currently resides around the 0.69 level, which I think is also resistance. As long as there are a lot of concerns out there around the world with global growth, it makes quite a bit of sense that the Australian dollar will struggle.

Beyond that, the US Treasury markets have attracted a lot of money, and that of course is all priced in US dollars. This gives us a bit of a boost to the US dollar, so I do think it’s only a matter time before we break down on any rally. I recognize that the hammer from last week is of course supportive, but I also recognize that we are grinding enough that one would probably be correct in assuming that there is at least a certain amount of support in this region. This is a chart that looks very confused at the moment but is most certainly negative from the longer-term aspect. A break down below the bottom of the hammer from last week would send this market down towards the 0.65 handle, which is a longer-term support level based upon the monthly timeframe. I would anticipate a lot of action in that area if we were to make that break down. At this point though, I think it’s simply easier to short this market on small time frames after short-term rallies that show signs of failure. I have no interest in buying the Aussie dollar at this point, although I’m the first to recognize that we had sold off a bit too much in the past.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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