The Australian dollar drift a little bit lower initially during the trading session on Tuesday, but then bounced slightly to show signs of life again. This market should continue to be a bit quiet over the next couple of sessions, as the currency markets are going to be quite in general. Most traders are away for the week, so therefore at larger firms you will only have Junior traders on the desks, and that means it will be very unlikely for new large positions to be put on. I think that it is not until after New Year’s Day that the pair will make a significant move, and the fact that we are currently hanging about several different support and resistance levels in this market will only exacerbate the lack of momentum.
If we did breakdown, below the 0.7650 level is a sign that we should be selling. I think at that point we would go down to the 0.75 handle, which has been massively supportive. On the weekly chart, we have been forming hammers and supportive candles right along an uptrend line, but we also have massive resistance at the 0.78 handle, and even more so at the 0.80 level. In this type of environment, it’s very difficult to put a lot of money into the market place, least not until we clear something like the 0.80 level or the 0.75 level. In the meantime, be cautious, keep your position size small, and then pounce once we get a clearance of one of the larger areas.
Written by FX Empire