The AUD/USD pair initially broke out to the upside during the course of the session on Monday, but turned back around at the 0.7750 handle. Because of this, the market ended up forming a shooting star which of course shows quite a bit of weakness in this marketplace. After all, the Australian dollar is massively bearish overall, and certainly is not getting quite any help out of the commodity markets. The gold markets in particular are not helping the Australian dollar, as the precious metal continues to look a bit on the soft side. Nonetheless, the US dollar is one of the strongest currencies in the world as you can see on almost any chart, and the US Dollar Index of course looks like it’s ready to head to the 100 level.
The shape of the shooting star is just about perfect, and as a result I think that this market will continue to fall from here. I recognize that there is a bit of support just below, but it’s only a matter of time before we break down below there also. If we can get below the 0.76 level, I think that the market will then head to the 0.75 level.
There is a ceiling above.
I believe that there is a ceiling above, at the 0.80 handle. Because of this, it is only a matter of time before any rally has sellers step into this marketplace, and continue to punish the Aussie dollar. I believe that ultimately this pair probably goes down to the 0.70 level, and as a result we should see every time that this market rallies, sellers will come back into take advantage of value in the US dollar. However, I think we could, but it’s a question that we will answer later. In the meantime, I fully anticipate seen this market drop to that region.
