The AUD/USD pair rose during the session on Tuesday, slamming into the 0.90 handle. However, that area did offer enough resistance to keep the market down. With that being the case, we feel that the Australian dollar will struggle to get above this area, but even if it doesn’t have to chew all the way through the 0.93 handle in order to impress is enough that think about buying it. The commodity markets are not conducive right now for a strong Australian dollar, neither is the growth in Asia. Is because of that that we are simply waiting for some type of resistive candle in order to start shorting again.
On top of that, we think that this will give us a better entry price as we sell what is most certainly one of the weaker currencies out there right now. However, it must be said that over the next couple of days we could see Australian dollar strength. However, this would be akin to “catching a falling knife”, one of the worst things you can do in trading.
This market should continue on its way down to the 0.85 handle mounted the 0.90 handle has been overcome by the sellers, even if we bounced above it. Again, we are not impressed and to we get above the 0.93 handle, which is something that would take quite a bit of strength to get over. Asian markets and economies simply do not validate that type of move, as they have such a large effect on Australia itself. If the Australians are going to continue to export the Asian growth engine, it needs that engine to be firing on all cylinders. Presently, Asian growth is somewhat flattish, and as a result you cannot expect dynamic or massive things out of Australia.
Adding to the confusion is the fact that the gold markets certainly are struggling at the moment, and the US dollar although slightly week over the last couple of sessions, still is one of the stronger currencies out there right now. With that being said, we are simply biding our time and waiting for that sell signal.
Written by FX Empire