The AUD/USD pair went back and forth during the course of the session on Wednesday, testing the 0.72 level for support. Because of this, we ended up bouncing a bit and forming a hammer at this point in time. This hammer mirrors the hammer from the previous session, and as a result it looks as if the Australian dollar is starting to find some significant buying pressure. If we can break above the top of these candles, at that point in time I feel that the market will reach towards the 0.7350 level.
A break down below the bottom of the hammer sends this market looking for the 0.70 level, but having said that it will be very difficult to get down there. There are a lot of supportive areas between here and there although I do believe that they are fairly minor.
Australian Unemployment
By the time we get into the next session, we will have gotten unemployment numbers coming out of Australia, and that of course can greatly influence the currency. At this moment in time, it does look like there is quite a bit of bullish pressure underneath, so I tend to favor the upside at this point. This is kind of ironic though, because gold markets are screaming the exact opposite. Normally, the Aussie dollar and the gold markets move in tandem, but they have certainly broken that correlation over the last several sessions.
I do not think that this market will break down below the 0.70 level anytime soon even if we do fall from here, so that is not something that you want to pile a ton of money into on the breakdown. I also recognize that there is a significant amount of resistance between the 0.74 and the 0.75 levels, so I’m not exactly looking for a “melt up” either. I think simple volatility with an upward bias is what we are going to see.
