By FXEmpire.com
The AUD/USD pair looks rather weak after the previous five sessions failed to hold onto a rally that the bullish traders attempted. We are sitting above the parity level however, and this is the one thing that they can hang onto. This pair is most decidedly in a downtrend, and the shooting star for the week is situated at the 61.8% Fibonacci retracement level. This should on the whole, bring in a lot of traders to the downside.
One of the biggest concerns for Aussie bulls will be the week economic numbers coming out of China. If the Chinese slowdown, this will have a very adverse effect on the Australian dollar itself. Certainly, a slow China will demand far fewer commodities and raw materials that the Australians are so well known for exporting. As demand dwindles for such things as copper and gold, the demand for the Australian dollar will as well.
The fact that we are at what is known as the “Golden mean” by Fibonacci traders, certainly doesn’t help the bullish case either. With this being said, it looks like a break below the parity level would be a significant event, and send this pair much lower and even perhaps to the recent lows in the 0.95 area.
This all of course comes down to various factors, but one level will certainly be Europe itself. There is a European meeting at the end of the week, and is something substantial comes out of it, we could see a return to risk appetite. If we get that, the Australian dollar certainly will be one of the beneficiaries. However, it does not look like the market is setting up for any grade expectations at this point.
The opposite scenario is a break of the top of this week’s candle. If this were to happen, this would signal a break of massive resistance and could lead to a much larger rally. However, we think this is the least likely of the two scenarios and are looking to sell in general.
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Originally posted here
