The AUD/USD pair went back and forth and very choppy trading on Thursday initially, but then rolled over drastically. This of course is going to coincide with the gold market as per usual, which may have gotten ahead of itself. The market looks likely to reach towards the 0.7625 level again, which is significant support from what I have seen over the last couple of weeks. If we break down below that level, then I think we go to the important 0.75 handle. We had recently failed at a major resistance barrier, extending at the 0.78 level. I think because of this, the Australian dollar will continue to be a “sell the rallies” type of situation, and therefore it’s likely that the market will continue to be very choppy and short-term focus, but I think that any time we get a little bit ahead of ourselves, it’s time to start selling again. The 0.75 level being broken to the downside would be extraordinarily bearish for the Aussie, and could open the floodgates for losses.
Alternately, if we were to somehow break above the 0.78 handle, the market would probably go to the 0.80 level above which is the massive barrier for the market to get over to keep the uptrend intact. I think we are failing, and if that’s going to be the case I suspect that we are going to see a lot of volatility, but I do not expect any type of melt down. The market will look for external reasons to go in one direction or the other, so keep an eye on gold as per usual. There is massive resistance in the gold market just above the $1300 level, so quite frankly this point I suspect that this market favors the downside all things being equal.
Written by FX Empire