- The Aussie dollar initially tried to rally during the trading session on Monday but found enough resistance above, to turn things around.
- By following the way we have, we are forming a bit of an inverted hammer, which suggests that we are going to continue to see an attempt to break down through the major support level.
- The 0.6450 level underneath is a major support level going back quite some time, and if we were to break down below there and think it’s likely that the market really could make a bigger move.
Break Down Possible
The Australian dollar could break down below the 0.6450 level, which would be a very negative turn of events. At that point time, the market is likely to go down to the 0.63 level, which is a major area of support. This 0.63 level is an area that a lot of people have been paying attention to for some time, but it doesn’t necessarily mean that the area holds. Nonetheless, that would be my target on a breakdown with this inverted hammer that we are trying to form.
Under the hand, if we do break above the top of the inverted hammer, it opens up the possibility of a move 50-Day EMA. I don’t necessarily think that happens, but of course it is possible. All things being equal, the Australian dollar is highly sensitive to risk appetite, just as the US dollar is considered to be a “safety currency” overall. If we continue to see a lot of trouble, then it’s likely that the US dollar is likely to continue to see a lot of inflows.
In general, this is a market that I think continues to be very noisy, and therefore it is likely that we continue to see a lot of volatility. In general, this is a market that I think has shown its proclivity to continue to fall from you, and therefore I think you have to look at short-term rallies as shorting opportunities, just as that breakdown below support would be. In general, I prefer the US dollar over risky commodity currencies at the moment.
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