The Australian dollar fell precipitously against the US dollar during the session on Thursday, as it appears that the Aussie has run out of steam. On the daily charts, we formed a massive shooting star for the session, and have now fulfilled the promise of bearish pricing. It now looks as if we are going to go lower, and I now think that the market will probably try to break down below the 0.79 handle. If we do, that should bring in more bearish pressure. If we try to rally from here, I suspect that there will be more than enough pressure above to keep putting the market in a lower trajectory. I’m not looking for some type of massive meltdown, I just recognize that perhaps the market has run out of reasons to try to rally in the short term. After all, the United States looks likely to taper away from quantitative easing, and the Australian dollar is highly influenced by gold which of course was negatively impacted by that news.
The longer-term outlook for the Aussie is probably reasonably strong, but I think that a pullback has been necessary for a while, and we may be seeing the beginning of that. If we were to break out to the upside and above the 0.80 level, at that point I think you would have to start thinking about going long regardless. It would be all but unknown quantity that the buyers had come back into the market and were willing to push as hard as a possibly had to. Currently though, I’m looking to sell rallies on short-term charts and take advantage of the markets in that sense. I will reevaluate this every 24 hours as I typically do, but right now it certainly looks bearish.
Written by FX Empire