The Australian dollar fluctuated during the course of the trading session on Tuesday to show a bit of hesitation just above the 0.79 level. We are approaching the 0.80 level above, which is a large, round, psychologically significant figure. More importantly, it is an area that has been a bit of a pivot for the monthly charts, and therefore I think a lot of interest will be paid to this market in that general vicinity. If we were to break above the 0.80 level, then it is likely that the market could continue the next leg higher.
If it does take that next leg higher, it could send this market towards the 0.90 level, which is the next major resistance barrier on the longer-term charts. In general, we could see the 0.80 level offer resistance, and it is also possible that we may just simply pull back from here as well. If we pull back right away, the market could go looking towards the 0.78 level, which is a previous resistance barrier, and therefore should have a certain amount of “market memory” come into play. At that level, I think that a lot of people who have missed this move to the upside would be more than willing to jump in and get involved.
The candlestick itself could turn into an “inverted hammer”, showing signs of exhaustion and perhaps a turnaround. Even if we were to break down below the 0.78 level, think the 50-day EMA comes into the picture and also offers a bit of support. Keep in mind that the Australian dollar is highly levered to the commodity markets, due to the fact that the Australian economy has a huge mining sector, and we have seen a ton of demand coming out of China for iron and copper, which will help the idea of the Aussie strengthening as well. We are in an uptrend, but it has been rather relentless. I think we are probably going to see a lot of noise in this general vicinity just above, and I think that the shot straight up in the air will start to subside as we will more than likely have a much bigger fight on our hands to continue going higher.
