The Australian dollar has had an interesting day on Wednesday, as we fell significantly, but then turned around to find support just below the 0.74 handle. This is a large, round, psychologically significant number, so it makes sense that the buyers might be interested. The gold markets rallied, and the safety trade came back into vogue. The market as you can see has been sideways overall, and now I think that the buyers are starting to put even more pressure in this market. I think if we can break above the 0.7450 level, the market should continue to reach towards the 0.75 handle. Alternately, I think if we break down below the 0.7380 level, the market will start to roll over.
Volatility should continue
The volatility in this market should continue because of its correlation to gold, but at the same time the Australian dollar is considered to be a “risk on” currency. In other words, this is a very difficult market to trade it currently, and I believe the only thing you can do is trade the charts that you see. Right now, I believe that range bound trading continues, at least until we break out of the small range that we have been in. The market will continue to be influenced by all kinds of issues currently, so it’s probably difficult to hang on to any significant position for the longer term. Ultimately, I believe that the market is going to be one that is probably best traded with either small positions, or perhaps even options. Ultimately, the market will need some type of stability so that we can place quite a bit of momentum or even trading capital in this market. Ultimately, there are going to be easier markets to trade at the moment.
Written by FX Empire