The Australian dollar rallied a bit during the trading session on Wednesday to reach towards the 0.76 level. It should be noted that the 0.76 level offered a bit of resistance, so at this point I think it makes that we need a bit more clarity in order to get involved. For what it is worth, if we can break above the 0.76 level, then I think the market is likely to continue the overall consolidation, sending this market towards the 50-day EMA above. After all, the 0.76 level was the beginning of major support for the consolidation that we had seen previously, so that makes this a very interesting level to say the least.
We did pierce the 0.75 handle at one point a couple of days ago, so I think that if we were to break down below the 0.75 handle again, it is very likely that we could chip away at the support to turn things rather negative in a quick manner, as I would anticipate that the Australian dollar would more than likely go looking towards the 0.70 level underneath. That would obviously coincide with some type of negativity as it would show a massive turnaround for the greenback, traditionally the “safe haven asset” of choice for Forex.
I think at the very least, though, we probably have quite a bit of noise in this general vicinity, and that tends to make for a short-term choppy situation that a lot of scalpers will like. As far as longer-term trade is concerned, we are still looking for some type of breakout or breakdown to get involved with, so it allows for a bigger run. We probably have further to go to the downside if we do in fact have that kick off. Nonetheless, I will pay close attention to what the market does and whether or not we can close either above that 0.76 level or below the lows from a few days ago. Once that happens, I will put a position on, but in the meantime, I am not necessarily interested in putting a lot of money to work, as the Australian dollar is not only tied to the US dollar, but it is also tied to commodities which are a bit of a mixed bag across the board.
