The AUD/USD pair fell initially during the course of the session on Tuesday, testing the 0.7550 handle. We bounced enough to form a hammer though, so that suggests that we could get a little bit of a bounce and continuation going forward. This would make sense, as the area below has been so supportive, and the fall has been rather significant. Ultimately, the market will selloff at higher levels in my opinion though, as the Australian dollar is so highly leveraged to the commodity markets in general. Gold markets certainly aren’t helping either, so quite frankly it’s only a matter of time before the markets favor the US dollar overall. I believe that we will break down below the 0.75 level, and then head to the 0.70 level after that. There’s no interest in my opinion in owning the Australian dollar for any real length of time, as the downtrend is there for a reason.
Selling rallies
I believe that it’s only a matter time before the rallies get sold off, especially near the 0.77 handle, and the 0.7850 level. I think that the market will continue to attract sellers as it represents value in the US dollar retirement rallies. Besides, the Australian dollar tends to only do well in positive risk appetite markets, which don’t have much in the way of longevity. I believe that you will have to watch the commodity markets in general, not only the gold markets. Unless we start seeing quite a bit of risk appetite out there overall, I don’t see a scenario where the Australian dollar except any real momentum to the upside.
I recognize that the 0.80 level is a massive level in general, as it has been so important on longer-term charts for several years. I believe that we will stay well below that area for the foreseeable future, so quite frankly this is a sell and sell again type of market. I do not wish to go against the overall trend.
