The AUD/USD pair tried to rally during the course of the session on Tuesday, but turned back around and ended up forming a shooting star. That’s obviously a very negative sign, and as a result I feel that if we can break down below the bottom of the range for the Tuesday session, we should then reach down towards the 0.71 handle. Having said that though, I don’t expect any type of massive meltdown, as the marketplace isn’t going to be conducive for a longer-term move.
During the holiday season, liquidity becomes an issue and therefore it’s difficult to imagine some major are shattering news. Having said that, gold markets continue to go back and forth, and gains now look like they are about to start falling again. It’s simple consolidation in that market, but it has been very reliable, and therefore it would not surprise us at all to see the Aussie fall in reaction.
Continued Back and Forth
I believe that ultimately this market will continue to go back and forth over the longer term, with a downward bias. Having said that though, there are a couple of parameters that I have to pay attention to. For example, the 100 day exponential moving average is just above current prices, and as a result longer-term traders may be stepping into short this market again. Having said that though, the moving average has been somewhat ignored lately, so I don’t put too much stock into that holding up.
Speaking of the moving average, the reality is that it is sideways, so it does suggest that we are not ready to make a significant move. However, the US dollar continues to be the favored currency around the world, so I prefer shorting this market as opposed to buying it, even if we do continue to bounce. I think that the real turnaround in the overall trend won’t actually be seen until we get above the 0.74 level.
