The Australian dollar has been consolidating for what seems like a couple of lifetimes, and Friday was more of the same. Having said that, the Aussie dollar initially tried to rally but then sold off quite drastically to show signs of hesitation. We are well below the 50-day EMA, and now it looks as if it is going to try to go towards the most recent low. In general, the Australian dollar has been miserable to trade as of late, and I do not necessarily think that is going to change in the short term.
The candlestick for Friday is very negative, but at the end of the day there is still plenty of support underneath that has to be paid close attention to. For example, the 0.76 level has been support, and it does extend down to the 0.75 level. Then, I think it is not until we clear all of that region to the downside that I would be a major seller. At that point, I think that the market would probably go down towards the 0.70 level.
To the upside, there are multiple resistance levels that the market continues to struggle with. The 0.7850 level is a significant resistance barrier, followed by the 0.80 level which I see as 100-pips thick. If we could break above there, then the Australian dollar becomes more of a buy-and-hold situation where we probably pick up nine or 10 handles. Having said that, I do not think that is very likely to happen anytime soon, as we simply do not have the momentum.
I think that we probably will continue to go back and forth in this range, simply grinding back and forth in order to cause as much destruction to trend traders as possible. If you are a short-term scalper, then this might be a market where trading, but at the end of the day it comes down to your timeframe. The daily chart has given almost no signal in the last several months, and it could be noted that perhaps we needed to digest some of the massive gains from before, as the market shot straight up in the air like it was fired from a cannon on the reopening trade. At this point, what I do find interesting is that commodities are skyrocketing, while the Aussie seems to be ignoring all of that.
