The Australian dollar had an interesting session on Tuesday, as we broke above the psychologically significant 0.75 level, but turned around to form a less than stellar move. If we can break down below the 0.7450 level, the market then could continue to go lower. Longer-term, we are still very much in a downtrend, and of course the Australian dollar is typically driven by what’s going on in gold and of course risk appetite. It looks currently as if the gold markets are struggling, and most certainly the Australian dollar is, especially considering that a lot of the raw materials that Australia provides the Asian region is losing value. In other words, people are using less copper and iron.
The market has been in a longer-term downtrend, and it looks like we could possibly be trying to continue that overall move. If we can, the market should then go all the way down to the 0.70 level over the longer term. Alternately, if we can break above the 0.7525 level, the market will probably try to find its way towards the 0.7750 level over the longer term. That is going to be the more difficult move, but quite frankly most of the time we have a bullish move, it is a bit more difficult because as you know, “markets climb a wall of worry.” That’s exactly what this is going to be if we do go higher, so the fact that we pulled back is not a huge surprise. On the hourly chart, you can make out what could be thought of as an uptrend line, and if we break down below that, which is essentially the same thing is breaking down below the 0.7450 level, the market should continue to go lower as it shows a pickup in bearish pressure.
Written by FX Empire