The Australian dollar rallied significantly on Tuesday to show signs of strength again, and even closed at the top of the range. The fact that we are sitting just below the 0.75 level does in fact suggest that we have further to go at this point. The Aussie has been struggling due to the Chinese economy, but it now appears that people are looking beyond that and trying to short the US dollar overall. The 0.75 level is a very important level that people will be paying close attention to, and a daily close above it can send this market much higher.
Looking at this chart, you can see that the Aussie dollar has been one of the better performers as of late, and it looks as if the explosive nature of the move on Tuesday does in fact suggest that we are going to go much higher, perhaps reaching all the way to the 0.78 level over the longer term. This is a longer-term move just waiting to happen, but that does not necessarily mean that should you jump in with a huge position right away. However, this is a market that I think is trying to make its bigger move, and if we continue to see the US dollar gets sold off it will almost certainly be seen as yet another signal to buy this pair.
I do suspect that there is a lot of noise just above, but it seems as if every time the Australian dollar looked as if it was ready to rollover, buyers came back in and pick it up. This is a market that I think given enough time will be crucial and could give us a good look as to where we are going over the next several months when it comes to the greenback. We clearly have seen quite a bit of momentum in this market, and I think that is something that cannot be ignored. In fact, it is probably worth noting that the Tuesday candlestick was one of the most impressive once over the last several months, and therefore one would have to think that it is very likely to be followed through with more momentum. If we can break out, this could be a nice longer-term play that we can take advantage of. However, if we were to turn around and break back down below the 0.74 level, it would simply lead to more consolidation.
