The AUD/USD pair initially fell during the course of the session on Thursday, but found enough support near the 0.7250 region to turn things back around and form a hammer. That hammer of course is a bullish sign but I am choosing to ignore it. I believe that a rally from here will more than likely send this market towards the 0.75 level, where I could imagine seen quite a bit of resistance. Looking at this, I believe that the sellers will step into this market, and eventually push it much lower.
Beyond that, if we break down below the bottom of a hammer that would of course be a very negative sign. I believe that the market would continue to go much lower, probably heading to the 0.70 level. Ultimately, keep in mind that the downtrend is very strong, so at this point in time rally should continue to offer nice selling opportunities as well as breakdowns.
Gold
Gold markets rallied quite strongly during the session on Thursday as well, but they are running into a significant barrier of resistance. Because of this, I believe that the Australian dollar will struggle a bit. It’s difficult to imagine that this market goes much higher until we get more demand for hard minerals out of Asia, and gold of course as well. With this, I believe that Australia continues to struggle in general, and at this point time the currency will also. I don’t necessarily look for any type of meltdown, I just think that we are going to reach towards the 0.70 level next.
The only way that I would consider buying this currency pair as if we broke above the 0.76 level, something that isn’t going to happen anytime soon. On entering, I will keep an eye on longer-term charts as well to see if they offer clues of a trend change. The meantime though, the only thing we can do is sell as that’s the only reliable signal.
