The AUD/USD pair initially rallied during the course of the session on Friday but turned back around and form a perfect shooting star. On top of that, it is right at the 0.70 level, so it is essentially a “perfect set up” as far as we can see. If we break down below the bottom of the shooting star, the market could very well drop from here and reach towards the bottom of the recent consolidation area. That has this currency pair reaching towards the 0.68 handle given enough time, and of course we believe that makes a lot of sense as we are most certainly in a downtrend, and of course the Australian dollar is a bit of a proxy for the Chinese market, which of course has quite a bit of negativity involved in it at the moment.
Economic growth and global markets continue to show quite a bit of volatility, and as a result it makes a lot of sense that the Australian dollar will struggle. On top of that, the US dollar is without a doubt one of the most positive and favored currencies in the world. Pay attention to gold, it can have an effect on this market and it does look positive, but at the end of the day it appears the Forex markets are more or less focusing on Asian economies more than precious metals when it comes to the Aussie at the moment.
On the other hand, we can break above the top of the shooting star and while that is a positive sign, we will simply step to the sidelines and wait to see whether or not the previous uptrend line offers resistance as it should in theory. If it does, we are more than willing to sell exhaustive candles there as well as it could give the market a bit of space to build up enough momentum to finally break down even lower. At this point, we don’t really have any interest in buying the Aussie dollar as there are far too many negative things going on in the world.