The AUD/USD pair broke higher during the course of the session on Tuesday, reaching towards the 0.80 handle. That being the case, the market looks as if it has in fact retested this area as it was once such a massive supportive range. That area was one of the biggest resistance barriers years ago, so now it appears the market memory could be creeping back into the market and as a result we could continue to see selling pressure in this general vicinity. On a break below the bottom of the shooting star, this market should drift lower, probably heading to the 0.75 handle next as it is the next large, round, psychologically significant number.
I believe that a break above the 0.80 level would of course be important, but it’s difficult to imagine buying this currency anywhere below the 0.83 handle. The Australian dollar normally is helped by gold markets going higher, but we have not seen that lately and I believe this divergence shows just how weak the Australian dollar is at the moment.
No need to fight the trend
There’s no real need to fight the trend at this point in time. I believe that any resistive candle between here and 0.80 is a nice selling opportunity. On top of that, we have already formed that so I don’t see any reason why we don’t continue to fall from here. It could be a bit of a volatile market going forward, but ultimately I think the downward pressure continues as the US dollar is without a doubt the favored currency around the world right now.
The market breaking above the 0.83 level would of course be a significant, and could send the Australian dollar looking for the 0.85 handle. However, I do not see that happening anytime soon so I am essentially not even looking for buying opportunities at this point. I know that they will happen from time to time on short-term charts, but quite frankly it’s just not worth the risk in my opinion.
