The Australian dollar rallied significantly during the Thursday session, as we finally broke above the 0.78 level it had been giving us some many issues. We pulled back a bit, but are starting to see buyers yet again. Because of this, I think that the Australian dollar continues to reach to higher levels. The 0.70 level mouse should act as support, and that gives us an opportunity to trade going forward. The 0.79 level will be the next target, followed by the psychologically and structurally important 0.0 level, which has offered both support and resistance going back decades. Breaking above that level has the market challenging the 0.81 level which is the gateway to much higher levels, and opens a “buy-and-hold” type of situation.
In the meantime, I look at pullbacks as buying opportunities, especially of gold can rally. Gold as I write this article is currently testing the vital $1300 level, and if we can break above there then we could go much higher. That should drag the Australian dollar higher as well, as it is so influenced by of the precious metal. At this point, I don’t expect this to happen, but if we did breakdown below the 0.7750 level, that would negate the entire uptrend idea and would be very negative. I think there’s a lot of noise in this market though, so I expect that the move to the upside is going to be very choppy. If you can handle the volatility, this could be a longer-term play just waiting to happen. I think that the market is getting very comfortable above the 0.78 level, so it’s only a matter of time before the money flows back into the Australian dollar and pushes it much higher. This will be especially true if there’s more of a “risk on” feel to the markets overall.
Written by FX Empire