The Australian dollar has been very volatile during the trading session on Wednesday, as we continue to bounce around overall. The market looks susceptible to selloffs, so I suspect that any rally will end up being an opportunity to pick up value in the US dollar. However, simultaneously it looks like were trying to form a hammer on the daily chart. Because of this, if we can break above the 0.79 level, then the buyers should come back into the market and push towards the 0.80 level. This is a market that continues to be very noisy, and of course is highly influenced by gold markets. The volatility will be difficult to deal with, as the Forex markets continue to be very noisy and headline driven, as traders are in a mood to trade first and think later.
If we break down below the 0.78 level, then I think the market goes to the 0.7750 level. That was an area where we had seen significant resistance in the past, and a breakout above that level was a very bullish sign. I would expect to see quite a bit of support in that area, perhaps offering the opportunity to bounce and go back towards the 0.80 level. In the way, I think we will eventually get an opportunity to go long. I don’t like selling this pair yet, least not until we were to break down below the 0.77 handle. In the meantime, I think that it is a nice buying opportunity to pick up value. The 0.80 level above has been important going back decades, and that should continue to be a major level for the markets, so expect a lot of noise over the next several weeks. Ultimately, small position and is probably the best defense.
Written by FX Empire