The Australian dollar fell a bit during the session on Monday, as we initially gapped down, and then started falling. However, we bounced to test the area we gap down from, and then rolled over again. As we have made a “fresh new low”, it suggests that we are going to continue to see selling pressure. Gold markets of course are highly influential when it comes to the Aussie, but it currently looks as if we are stuck in some type of consolidation area at a very low level. Typically, consolidation leads to continuation, so I believe that the market is probably favoring the downside move currently.
Selling below the 0.7350
If we can sell below the 0.7350 level, I feel that the market will be free to go towards the 0.70 level below as it is a larger round number and of course an area that has been of interest for longer-term traders. Alternately, if we did manage to break above the 0.7425 handle, then we could start to see buyers creep into this market and perhaps try to make a move towards the 0.75 handle. However, I think that the move needs to correspond with whatever is happening in the gold market. In other words, if we can see this market move in the same direction as gold, it will be a much more reliable trade in my opinion. Currently, it certainly looks as if the sellers are more than likely going to take over again, and I think that if gold markets continue their march lower, that will only put even more significant pressure on a currency that has been struggling as of late anyway. There is a lot of support near the 0.7370 level, so that will be a barrier that the sellers must break through.
Written by FX Empire