The Australian dollar fell initially during the day on Wednesday, but found enough support at the 0.7880 region to turn around and bounce. As we await the FOMC minutes later in the day on Wednesday, I believe that there is an obvious trade to be had in this market place if you are patient enough to allow it to occur. If the market breaks above the 0.0 level on significant volume, I believe that the market will continue to go much higher, and it will be the “next leg” in the uptrend of this market. With this being the case, I think that waiting for the breakout is probably the best way to play this market.
The value of Gold
Remember that the value of gold has a lot to do with what the Australian dollar does, so if it starts to rally I suspect that the AUD/USD pair will go much higher. It will probably be volatile, but I think we will eventually break out. Alternately, if we do start to sell off, I believe a move below the 0.7880 level could send this market down to the 0.78 handle next. Either way, I think that there is a significant amount of upward pressure, and with this being the case it’s very likely that the buyers will return so any shorting opportunity is probably going to be short-lived at best. I think there will be a lot of choppiness, but an underlying bullish pressure that markets will be attracted to. I think the Australian dollar eventually breaks out, but the 0.80 level is a significant level on longer-term charts, going back decades. Because of that, it will take a significant amount of momentum to finally break out. Be patient, it should give you an opportunity eventually.
Written by FX Empire