The AUD/USD pair rallied during much of the session on Wednesday, breaking above the 0.95 handle. This level had previously been significant support, so I had anticipated it being massive resistance. On Wednesday, I certainly would not have been disappointed as the market gave back almost all of its gains by the end of the session. The one thing of course it makes is a little bit difficult is the fact that the Tuesday candle is a hammer, suggesting that there is a fight on our hands below.
The Australian dollar is highly leveraged to the Asian economic conditions out there, and as a result Chinese numbers looking weaker than anticipated certainly do it no favors. Also, it should be noted that the Reserve Bank of Australia is fun to be thinking about cutting rates, and that of course hurts a currency as well.
Now that we are testing previous support, it makes sense that we are seeing significant resistance. Because of this, it was no surprise for me when I saw of the shooting star for the session. The shooting star preceded by a hammer suggests that there are plenty of people going back and forth in this general vicinity, and because of this we could have a bit of a sideways move. However, all along I expect this market to break down.
0.90
As far as I can tell, the Australian dollar looks like it's trying to head down to the 0.90 handle. Down there, we will see a lot of fire step into the marketplace based upon the large round psychological significance of the number, and the technical significance as well based on the longer-term charts. That being said, I think that there is a nice intermediate move waiting to happen against the Australian dollar, and it must be said that so far every rally since early April has been an excellent shorting opportunity in this market. I do not see anything in this chart that suggests that the behavior that we've seen is going to change anytime soon. In fact, I would have to see the daily candle close above the 0.98 in order to consider going long at this point.
