The Australian dollar initially tried to rally during the session on Friday, but found the 0.7750 level to be resistive after we broke down below it. This is a very negative sign for the Australian dollar, as this was the scene of a major breakout. Ultimately, I think that the market is probably going to continue to go much lower, and that’s going to be especially true if the gold markets roll over. Ultimately, I think the market could go looking as low as the 0.75 level the short term. As far as buying is concerned, I would be very hesitant to do that, least not until we break above the 0.78 level. There is so much in the way of volatility and I think that the markets will be difficult to deal with if you are bullish. However, you may get a rapid move lower, if you are selling. Because of this, I think is can be much easier to sell, and that’s especially going to be true if the gold markets roll over significantly.
I am selling rallies on short-term charts until we break above the 0.78 handle, because that of course would show a significant bounce after an attempt to break down drastically. I think that if we can break above the 0.70 level, then the market will go looking for the 0.80 level again. However, I think it’s very unlikely that we see that right away, so I think that you should get some or opportunities in both directions if you nimble enough, but I would also suggest that perhaps buying is going to be much more difficult to do unless you do it slowly and build up a larger term position. Nonfarm payroll days are very difficult, especially considering that we have mixed signals from the employment situation. In a sense, this almost looks as if it is a “risk off” move.
Written by FX Empire