The AUD/USD fell originally during the Tuesday session, but managed to pop back up during the later hours. The resulting candle is a hammer-shaped one, and this suggests some kind of support just below where the market sits. It should be noted that the parity level is just above , and it did in fact hold the Aussie down for the second time on Tuesday. The pair looks like it wants to bounce, but the parity level is also where the 50% Fibonacci retracement level sits from the last move down.
The candle shape also suggests that a break to the downside form here would be very, very bearish. In fact, the shape would then be known as a “hanging man”, which is decidedly bearish for the market. The breaking of the Tuesday lows would have us aggressively short of the Aussie yet again. However, we aren’t willing to bet on the parity level holding price down over the long haul until we see this happen.
On the buy side, we simply need to see a daily close above the 1.0000 area. The breaking and closing above that area would have the market looking for the 1.03 area or so, and would be a nice bounce waiting to happen.
As long as the economic scenario worldwide is one of fear though, it will be hard to buy and hold the Aussie for any real length of time though. The attitude of the markets is simply too pessimistic to get that bullish.
Written by FX Empire