The Australian dollar has been very volatile during Monday trading, initially surging higher during the day, but finding enough resistance near the 0.7650 level to roll over and sell off rather significantly. The daily candle looks very likely to form a shooting star, and at a vital resistance barrier. I believe that if we break down below the 0.7585 level, the market should then roll over towards the 0.75 level where we should see even more significant order flow. A breakdown below the 0.75 level sends the market looking to the 0.7350 level next, as it has shown signs of support in the past. Remember, we have seen a significant pullback from the vital 0.80 level, which is massively important on charts going back decades. If we were to break above the 0.80 level, that could signal a very long-term moved to the upside. However, we do not have the bullish gold market that would be needed to facilitate this move.
I believe that eventually we will break down, as the gold market simply cannot move forward. There seems to be a massive amount of resistance above current levels in gold, and I think that’s going to continue to work against the Australian dollar. In general, this is a market that tends to be very violent and its movement, but I think we can continue to start selling rallies, and you can see that on the hourly chart we have crossed over in the overbought part of the stochastic oscillator. I think that even if we break higher than the highs of the Monday session, we probably will find sellers again rather soon. It is because of this that I certainly favor the downside going forward, and don’t have much in the way of an appetite for buying.
Written by FX Empire