The Australian dollar initially fell on Thursday but turned around to break above the 0.80 level again. This is a very significant break out, as we have made a “higher high” in a market that’s trying to break above a decades old resistance barrier. This is essentially the longer-term “fair value” between the 2 currencies, so we can find ourselves going higher from here, the next logical target will be the 0.90 level. I believe that we could even go as high as parity, and that will be especially true if the Federal Reserve does not raise interest rates later this year as many people are starting to believe. Gold of course has its typical influence on the Australian dollar, so if it starts to rally, that will only be yet another reason to go long. If we can stay above the 0.7985 level, I think that the buyers are here to stay. That’s not to say that we won’t get volatile moves occasionally, but those pullbacks should be opportunities to add to an already long position. I have no interest in shorting the Australian dollar, looks as if it is ready to make a serious move.
Buying dips is probably the way to play this market, as these longer-term moves can last for quite some time. By adding incrementally, the market is one that you can deal with easier, and you can stand longer. I believe that this could be an investment, not just a trade, so I am very interested in being long of the Aussie. I have no interest in shorting anytime soon, it would take a significant change in overall attitude that I do not think is coming anytime soon. The uptrend looks very convincing.
Written by FX Empire