Looking at the AUD/USD pair, you can see that we initially fell during the session on Wednesday. However, we found the 0.70 level below as supportive. With this, we bounced enough to form a hammer and that of course is a very bullish sign overall. However, the marketplace suggests that we are still very much in a downtrend, but a bounce from here would simply offer a bit of a selling opportunity at higher levels, but at this point in time I believe that there could be a short-term buying opportunity. Ultimately, I think that the market will recognize that a bounce from here is going to offer “value” in the US dollar. That of course should have buyers for the greenback, and then in that case selling of the Australian dollar.
Commodities
Keep in mind that the Australian dollar is highly sensitive to commodity markets, especially the gold market. However, commodities in general that are considered to be “hard commodities” can all have an effect on the Aussie dollar. This is because they exports so many commodities from Australia to Asia as Chinese building and the like will have demand for these ores. With that, I think that any rally at this point in time should be looked at as a potential selling opportunity and I think that there is going to be a significant amount of resistance near the 0.72 level, as it was previously resistive. I don’t see any reason why it won’t be now, and as a result I am a bit skeptical of any rally. Again, if you are a short-term trader you may find value here but at the end of the day I am much more comfortable selling on resistive candles after the move higher. On the other hand, if we break down below the bottom of the lows, there’s probably going to be more bearishness and I would be a seller at that point and aiming for the 0.6750 level.
