The AUD/USD pair fell during the session on Wednesday, breaking below the previous low on Tuesday. As you can see, we also broke down below the hammer on the Monday session, and now looks like the pair is ready to continue lower, probably heading towards the 0.90 level. However, I feel that this market will more than likely bounce from that level, as it is a large round psychologically significant number.
If you haven't short of this pair yet, it's probably best to wait for some type of bounce in order to get a better entry price. Quite frankly, this market has sold off strongly enough that I believe that the market will eventually bounce, and then find some type of resistance. A resistive candle at a higher level certainly offers a more attractive entry price, and as a result that's exactly what I am planning on doing, waiting.
Gold markets.
The gold markets have been fairly weak lately, and of course the Australian dollar has followed suit as it typically will do. Over the longer term, the two markets do tend to move in tandem, and the gold markets certainly do look like they are starting to break apart. The $1200 level below though should offer quite a bit of support in the gold market, so keep an eye on that area as to hints as to where the Australian dollar may head.
Even if we did get a bit of a rally from here, I have a hard time believing that the 0.9250 level will be broken on a daily close, and therefore I would love to see some type of resistive candle in that general vicinity in order to take advantage of what could be another 200 PIP move or so. On the other and, if we did get a close above the 0.93 level on a bounce, that would more than likely change the overall complexity of this market. If we get a daily close below the 0.90 handle, I believe the next target will be the 0.88 level, and I would be massively short of this market.
