The Australian dollar gap lower at the open on Monday, turned around to fill the gap, and then rolled over to test the 0.7625 level. The market underneath continues to be supported very stringently at the 0.76 level, but we are starting to see the stochastic oscillator turn around and cross in the oversold area again. I believe that the market will bounce on the short-term, as we have been consolidating for some time. However, if we were to break down below the 0.76 level, the market should then go to the 0.75 level after that. The 0.75 level of course is a large, round, psychologically important, so having said that it’s likely to be an area of significant volatility. In the short term, I believe that the 0.77 level above will be massively resistive, so if we do get a short-term pop to that level, I think it could be a nice selling opportunity again.
Gold markets need to give the Australian dollar help if it wants to rally, so I think paying attention to the gold markets is crucial. The $1300 level above is massively resistive, and it’s not until we break above there that the help would be enough to perhaps make the Australian dollar rallied significantly. Beyond that, there is the 0.80 level above which is the decades long important level that has been a bit of a pivot for the market. Overall, the market continues to be very choppy, so I think that the most prudent way to trade this market is in somewhat of a back and forth manner, perhaps on short-term charts only. Longer-term traits will be very difficult to take on, as we have been so choppy, and it should continue to be so soon.
Written by FX Empire