The AUD/USD pair fell hard during the course of the day on Tuesday, stopping just above the 0.70 level. This of course is a large, round, psychologically significant number, and one that will attract a lot of attention by traders worldwide. Because of this, even though the candle looks as if we are going to continue going lower, it is difficult to start selling right away. After all, these large, round numbers tend to attract a lot of buy orders.
On top of that, you have to keep in mind that the commodity markets got absolutely pummeled during the session on Tuesday. This is very negative when it comes to the Australian dollar, because of the fact that the Australians export so many minerals and metals. With this, you have to keep in mind the usual gold market correlation to the Australian dollar, and that didn’t exactly look strong by the end of the day either.
Selling only
If we can break down below the 0.70 level on a daily close, at that point in time I am more than willing to start selling the Australian dollar again. With this, we should then move towards the 0.68 level, as the market will continue to crumble. On the other hand, we could rally at this point in time, but it more than likely will only end up being a selling opportunity from higher levels. If we do rally, I will be looking for a resistive candle in order to start shorting again as a represent value in the US dollar.
The 0.73 level in particular looks very resistive, and most certainly the 0.75 level will be. Ultimately, I don’t have a scenario in which I am looking to buy the Australian dollar right now because not only are the commodity markets hurting, risk in general is being shunned. With this, I am selling but I need to get the right signal either above or below current levels.
