The AUD/USD pair initially tried to rally during the session on Tuesday, but as you can see pullback to form a bit of a shooting star. This is a market that has been in a downtrend for some time, and therefore I have no interest in buying the Australian dollar. On top of that, the 0.80 level above is massively resistive, and I feel that the Australian dollar will continue to struggle to get above that area as it was the scene of significant support in the past, which should now be resistance. On top of that, the Australian dollar is highly correlated to the commodity markets, such as gold and copper. Both of those markets are struggling a bit these days, so it shouldn’t too much to help the Australian dollar.
Far too much risk out there for the Australian dollar to go higher
There’s far too much risk out there globally for the Australian dollar to continue going higher, so therefore I feel that the Aussie dollar will continue to struggle overall. Anytime this market rallies, I look at it as an opportunity to pick up the US dollar “on the cheap.”
I believe that this market will go to the 0.76 level again, but it will more than likely be choppy all the way down there, and as a result you will have to be able to deal with a lot of volatility if you are going to continue to short the Aussie. I believe that every time this market rallies, there will be sellers taking advantage of the massive downtrend. The 0.80 level above is going to be massive in its implications, and as a result any resistive candle near that area should be attractive to those who look to punish the Aussie for the lack of enthusiasm and the commodity markets.
If we did break above the 0.80 handle, I see a significant amount resistance all the way to the 0.83 level, and with that I feel that it isn’t until we get above the 0.83 level that I feel the Aussie can be trusted to the upside.
