The Australian dollar initially tried to break above the 0.75 level during the day on Tuesday, but pulled right back down to form a candle that almost serves as a shooting star. On a break below the bottom of the candle I feel that the market will continue to go lower, and if we can get below the 0.7450 handle, the market should continue to go even lower than that. Ultimately the target should be somewhere around the 0.73 level, and then below there longer term. I have no interest in buying this pair, I believe that it is going to continue to be very soft overall, especially considering that the gold markets don’t offer much in the way of bullishness either. So having said that I am a seller of the Aussie dollar only, and not interested in buying because I not only recognized be resistive nature of the candle on Tuesday, but I also recognize that the previous uptrend line should now be rather negative.
Also of interest is the fact that the candle appears at roughly the 38.2% Fibonacci retracement level, a commonly used retracement level by a Fibonacci traders. The US dollar continues to be one of the strongest currencies in the world right now, boosted by the likelihood of a Federal Reserve interest-rate hike in the near term. Beyond there, the Reserve Bank of Australia is nowhere near raising interest rates, so it makes sense that we should continue to go lower over the longer term.
It’s not until we break above the uptrend line that I would consider buying this pair, and quite frankly I would need to see the gold markets exploding to the upside as well, and perhaps clearing the $1200 level at the same time in order to feel comfortable going long. The Aussie certainly looks soft at this juncture, and I don’t see any reason for that to change in the near term. One thing I think you can count on is volatility but I think there is also going to be a stronger negative bias.
Written by FX Empire