The AUD/USD pair initially tried to rally during the day on Tuesday, and took back about half of the losses from Monday. However, the buyers soon found themselves slipping as the Australian dollar simply cannot hang onto gains at the moment. With that being the case, we ended up forming a shooting star which of course is fairly bearish. I believe that the fact that we formed this candle at the very bottom of an impulsive red candle suggests that we are going to go lower. On top of that, the Thursday and Friday candles were both shooting stars, so certainly this market is struggling to hang onto gains at this point.
I think that every time this market rallies, sellers will continue to step in and punish the Aussie bulls. Quite frankly, I see no reason whatsoever to buy the Australian dollar, as not only do we have quite a few weak looking candles, but we also have the 100 day exponential moving average just above, which of course will attract longer-term sellers.
The 0.80 level remains important to me
I still believe that the 0.80 level is important, especially when you look at the longer-term charts. This is an area that has caused quite a bit of reaction in the markets over the last several years, and the fact that we broke down below it to me is a very bearish sign. I think that we are getting ready to head to the 0.7550 level, which of course means we will test the 0.75 handle given enough time. I do believe that we break down below there, especially considering that the gold markets aren’t really helping the situation when it comes to the Australian dollar currently.
If we can break down below that level, I see no reason why we won’t then head down to the 0.70 handle. That level of course is a large, round, psychologically significant number, so expect buyers in that region.
