I think it is just a bit easier to be a buyer of this market than a seller, although that does not necessarily mean that it would be easy to hang on to the position nor would it be easy to simply get aggressive at this point in time.
The Australian dollar has rallied a bit on Tuesday to break above the 0.75 level, but then got hammered in the middle of the day, only to turn around and rally again. Quite frankly, this is a market that continues to hear a lot of noise right around this area, as it appears we are in the midst of trying to make bigger decisions. If and when we do, it could lead to the markets showing us where the next 300 pips come from.
The Australian dollar is of course very highly levered to the commodity markets, so that is something that is worth paying attention to. The commodity markets have essentially been on fire as of late, so it does make a certain amount of sense that we would see the Aussie continue to show strength. If we can get above the 0.76 level, it is very likely that the Aussie will continue to go much higher, sending the pair towards the 0.78 level. Another reason that could see this market go looking to the 0.78 level is the fact that we have the “W pattern” underneath showing signs of life as well. The “measured move” of that “W pattern” is to reach the 0.78 handle, so it does make a certain amount of sense that it all ties together.
On the other hand, if we were to break down below the 200-day EMA, that could send this market much lower, perhaps looking towards the 50-day EMA which is just below the 0.74 handle. Breaking down below that negates anything remotely close to the idea of an uptrend, so you would have to pay close attention to something like that happening. If it does, then it is possible that we could see this market go looking towards the 0.72 handle rather quickly. That is not my best case scenario though, because quite frankly this market refuses to roll over, and has been extraordinarily resilient. Because of this, I think it is just a bit easier to be a buyer of this market than a seller, although that does not necessarily mean that it would be easy to hang on to the position nor would it be easy to simply get aggressive at this point in time.