The Australian dollar initially went sideways during the Monday trading hours, but eventually found buyers as the market started to reach towards the 0.7550 level above. That’s an area that will cause a little bit of resistance, but ultimately, I do think that we break above there and continue to go much higher, perhaps the 0.76 level above. I believe that pullbacks offer value, but there could be a significant amount of volatility in this market over the next several sessions. Nonetheless, we are in an uptrend and there’s really no way to argue that looking at this chart. I think that the sideways action is simply the market trying to catch its breath before the next move higher.
Gold markets will have to be paid attention to, and they look like they are trying to form a bit of support. Because of that, it’s likely that once they start to rally, the Australian dollar will do the same thing. Remember, there is a risk appetite component to the Australian dollar, but, if there is a safety bid into the gold markets, that could help the Australian dollar at times as well. I believe that the market will eventually go looking towards the 0.77 handle above, and then the 0.80 level after that as it is a longer-term target in general. The 0.75 level continues to offer support, and I believe that short-term pullbacks are a very good way to take advantage of a market that should continue to see quite a bit of bullish pressure longer term. That doesn’t mean that it won’t be choppy, I think it will be in fact, but I recognize that if you are patient enough you should be rewarded for holding the Aussie dollar.
Written by FX Empire