The AUD Starting to Break Down
There continues to be some geopolitical worries in the air today and again it is the US and China at the forefront.
The news today has been that Trump has signed legislation, that supports the Hong Kong anti-Government protestors. Clearly this is a move that China would hate and it is sure to increase tensions.
This all comes just when the US and China appeared to be making good progress on a trade deal or at least phase 1 of that process.
The news seems to be hitting the AUD/USD and we are seeing it start to take out the recent lows around the 0.6770 level.
This has been an area I’ve been monitoring all week and is a bit of a make or break level in my opinion. Last time price tested this support region, we saw the buyers really step up. But this time it looks like they are starting to break.
IT also comes on the back of some bearish news from the RBA that has been rolling out over the course of a week and focused on more rate cuts.
So they are two big reasons to be bearish on the Aussie as well.
My thinking is that we will see some more selling come in and a break down to 0.6700-0.6720. The action whereby we see price get almost ‘walked’ down, is a big indicator of higher timeframe selling and I think that is what we are seeing here.
That suggests, the buyers could break suddenly and that would make for another leg lower, taking price into that target area.
The USD has also been well bid on the back of some data yesterday, but we must expect quiet action for the rest of the week with Thanksgiving about to get underway.
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