The Aussie dollar has been the punching bag of people like me for several sessions now. If you are someone that thinks the global economy is in more trouble that the leaders around the world are able to deal with, then selling the Aussie is an almost automatic reaction. As a side note, I don’t know what it is like where you live, but government is especially inept at anything important. This makes me doubt the ability of global leaders to do anything productive when it comes to complex issues like global growth. (They could let the natural cycle happen, but this would be too simple I suppose.)
The Aussie was trading at 1.06 just three weeks ago. In this scenario, it isn’t entirely surprising to see the pair bounce from the 0.98 level. That’s an 800 pip move in very short order. Also, the last three weeks only saw one truly positive session, so this bounce simply had to happen. However, the situation around the world hasn’t changed, and this is more than likely going to be a bit of a “dead cat bounce” as the market will continue lower.
0.96 is still probably viable
0.96 was my target previously based upon the bearish flag that the market produced. The level hasn’t been hit yet, but this move certainly suggests that it is very possible. The price action in this market is simply far too weak to suggest that the pair is ready to turn around and straight back up. However, the candle for the Monday session is strong, and this must be respected.
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I am looking to sell this market, and if I am patient enough, I will be able to sell the Aussie at a higher price is my suspicion. The parity level is an obvious candidate for resistance, but the 1.02 is an even stronger area of resistance as far as I can tell. Either of these areas are good launching points for short positions as far as I am concerned. A weak candle at either the 1.00 or 1.02 levels, and I am selling again. If we break the lows without revisiting these levels, I am selling as well.