The Australian dollar broke down significantly during the trading session on Wednesday, slicing through the 0.7750 level. This is an area that was massively important in the past, and I think we are now going to continue to see bearish pressure on the market, as gold will more than likely fall as well. Now that we are below the 0.7750 level, I think that rallies are to be sold, at least until we can break above the 0.78 handle with a daily close. The overall attitude of the market continues to be very bearish, so it would take a change of attitude in general to get this market going higher with any real strength.
The 0.75 level is the next logical support level, and I think it’s only a matter of time before we reach down to that level. That’s not to say that we will have sudden rallies, but I’m looking for exhaustion to start shorting as the market has broken down through such a significant barrier of support. This area was massively resistive for the longest time, and when we broke above that we went straight to the 0.80 level above. That’s an area that has been massively important for several decades, and I think that the move above could have been something special, but it seems as if we are not quite ready to do that type of bullish move, so I think that this pullback makes a certain amount of sense. Gold falling will only add more pressure to this market, as the US dollar looks to be strengthening overall, as it appears that the Federal Reserve is going to be very hawkish over the next several months, and leading into 2018. Ultimately, I think that the buyers have just about given up.
Written by FX Empire