The AUD/USD pair initially fell during the session on Monday in order to test the 0.7750 level but found enough support to turn things back around and send the market higher. Because of this, the market should then head to the 0.80 level where it will face a significant amount of downward pressure. I believe that the Australian dollar will continue to suffer as the commodity markets in general haven’t exactly been on fire lately, but I have the impression that the US dollar needs to take a little bit of a break from the massive bullishness that it had seen recently.
I think that there is an inordinate amount of resistance all the way up to the 0.82 level, so no matter what happens I am still looking for a selling opportunity. The gold markets look like they are bouncing a little bit and that of course can help the Australian dollar, but I don’t think that the gold markets have a clear path higher.
Selling rallies still
I still believe that selling rallies will be the way to go in this marketplace, as signs of weakness will return. At that point in time, I would anticipate the market heading back down to the 0.76 level, which of course is the most recent low. Whether or not we can get below that area is a completely different question, but at this point in time I believe that the Australian dollar is just simply taking a breather from the massive selloff. I believe that ultimately the market will break down below the 0.76 handle, but it might be weeks before we get below there. Expect quite a bit of resistance at the 0.80 handle, as it was once a massive resistance barrier in the past. It was also very supportive back in January, so of course it would make sense to have market memory come to play in that area. Ultimately, I believe that buying the Australian dollar is to simply going to be too difficult.
