Has the uptrend in AUD/USD reached a breaking point? Is there any way back out?
If you look at the current market trends, the Australian dollar is setting new highs against its major peers. There is one currency that has maintained the resistance level and one that is setting the lowest points of resistance. The Australian dollar (AUD/USD) has been testing that point since last year and has managed to break through it.
So, what is the issue? Deep in the pivot area of the strong retracement at the low of December 2020, the AUD/USD is slipping into oversold territory. The major bearish pressure was triggered by the United States Federal Reserve's December announcement of continued policy tightening. Following the decision, the USD appreciated aggressively against major currencies and the AUD has performed poorly, losing around two percent of its value.
Bearish sentiment is enhanced by expectations that the US Federal Reserve will soon go from their ultra-easy monetary policy stance to a stricter approach. With the strong support level falling away, this will open the door for new lows and for more potential sideways price movement in the AUD/USD.
If you are familiar with the Australian dollar, you will understand the importance of this key area. Most of the past rallies have occurred in this zone. In fact, most of the bullish rallies have taken place in this part of the chart. But the large bears have found ways to take advantage of this weakness.
It is important to realize that not all currency pairs are going to be volatile. As a trader, it is important to not succumb to emotions and be able to pick up on the signal of strength from that breakout or the weakness from the correction.
Now, it is also worth noting that the AUD/USD is a very important currency pair. The low of December is such a strong resistance level because it is the pivot of this big rally against the major currency pairs.
If you are willing to hold your position and hold your profits until the end of the year, then this type of currency pairs usually do offer good resistance levels. If you are in a downtrend and are looking for good support, then the weakness in the AUD/USD at the low of December is a very good time to put your money to work and win trades.
If you are looking for a breakout or a reversal, then you may want to consider those two currency pairs at the low of December. Of course, the strengths and weaknesses of each pair should be taken into account before deciding on a trading strategy.
However, the large global market players have often been prepared to take risks in currency pairs with strong fundamentals. There has never been a better time to decide whether the AUD/USD is set for a breakout or if the downside is too great to justify the trade.
The next few months will be very important to determine if the AUD/USD is set for a breakout or if the weakness at the low of December is a warning sign that there are large systemic risks associated with currency pairs that have weak fundamentals. fundamentals.
The charts suggest that there are some strong currency pairs that can perform well at lower levels than the current low of December and that is a good time to consider. their positions.