The AUD/USD pair fell slightly during the course of the day on Monday as we continue to see a lot of interest in the market at the 0.70 level. This area also features the 38.2% Fibonacci retracement level just above, so there will be some interest in that area as well. Ultimately, we do not like the Australian dollar because it is a proxy for China, and of course there are a lot of concerns coming out of that particular country right now. The fact that the Australian dollar continues to fall while gold markets continue to show signs of life also suggests just how poorly the Australian dollar may do in the future.
Any rally at this point in time will more than likely struggle as there is quite a bit of bearish pressure between here and the previous uptrend. The previous uptrend line as you can see was very supportive for quite some time, and as a result it should now be massively resistive. On top of that, the commodity markets in general are doing very poor and that of course will weigh upon the Australian dollar. Ultimately, the gold markets typically are drivers of this particular pair, but at this point in time there seems to be so much volatility in fear when it comes to the Asian markets that traders are simply ignoring what’s going on in the gold pits.
The 0.68 level below is the recent lows that will be targeted on a break down from here, but it’s very likely that we not only target that area but continue to go much lower. It is not until we break above the 61.8 Fibonacci retracement level at the 0.7140 region that we would consider looking for buying opportunities. Also, we would feel even better if we can break above the previous uptrend line, which is even higher than that. Simply put, we are looking for selling opportunities in this pair and ignoring buying opportunities at this point in time as the Aussie seems to be in a situation where it can’t get out of its own way.