Daily Forex Reports | by FX Empire | Thursday, 26 May 2016 06:09 UTCThe Australian dollar initially tried to rally during the day on Wednesday, but turned around back around to form a bit of a shooting star. It looks as if we are trying to bring ourselves lower, but the hammer from the previous session on Tuesday could offer a bit of support. If we can break down below the hammer though, that would be a very negative sign. Quite frankly, we believe that we will probably rally and then show quite a bit of resistance. On the chart, you can see the 50, 100, and 200 day exponential moving averages are getting ready to roll over to a negative trend. In other words, it’s likely that the longer-term downward pressure will continue. This makes a lot of sense as there seems to be a general running from risk at the moment, and of course the Australian dollar highly represents risk as it tends to follow commodity markets, as the Australians export so much gold, copper, and various other minerals.
Ultimately, rallies will have to deal with the shooting star from a couple of days ago, and then of course the 0.73 level, and the moving averages above which could start offering dynamic resistance as well. With that being the case, we have no interest in buying the Australian dollar less the gold market suddenly explodes to the upside, or if the Federal Reserve finally admits that it is not going to raise interest rates, something that is still very much in debate at the moment.
At this point in time, we believe that the Australian dollar will try to target the 0.70 level, mainly because of the psychological significance of that number. There should be support down there, so a drive down to that level will more than likely coincide with a nice bounce. As far as buying is concerned, we would have to move back above all of the moving averages, and quite frankly the 0.74 level before it seems possible as is market has seen so much in the way of selling pressure recently.
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