Overshoots are often
AUD/USD hit a fresh 11-year low today, hitting 0.6434 but more important that the size of the move itself is the shape of the price action.
AUD/USD imploded into the London fix in a 70 pip gap down where it was basically 'no bid' for a few minutes. Since then, it's recovered all the gap down and that's coincided with a broader turn in risk trades towards the better.
I don't like look at the RSI at a time of big fundamental change but the daily is down to 22. I don't think there's any big, V-shaped recovery coming in anything because it will take weeks at best to clear up coronavirus uncertainty.
However I like to see a blowoff like this in general. For this one though, I don't like buying it because 1) it was probably just be fixing flows, and AUD/USD is still down 80 pips on the day (no big turnaround) 2) Weekend risk is too high to buy anything today.
The latest headlines out of the US are that they still can't find any connections to the new California coronavirus case. Do you really want to go into the weekend holding risk assets with the threat of 100 new US cases by the open Monday?
