The AUD/USD pair rose during the session on Monday, bouncing off of the recent lows again. However, it’s a bit difficult to read too much into this chart, simply because Monday would have been such an illiquid session. Most traders are simply walking away from their desks at this point in the year, and certainly don’t want to take on any risky positions one day before the end of the calendar. Because of this, I am essentially ignoring this candle, but I do recognize that a bounce from here is in fact quite possible. On top of that, I believe that it could be a nice selling opportunity at the right conditions arise.
I see the 0.90 level as being extraordinarily resistive at this point in time, and would welcome a bounce back to that level with signs of resistance. I don’t even know if we can get that high, but the likelihood is that we will more than likely find plenty of resistance in that general vicinity. I would not hesitate to sell a resistant candle in that area, and would quite welcome it as it should be a continuation of the downtrend.
The alternative scenario.
The alternative scenario of course is that the market breaks to a fresh new low first, and that works just as well for me. I believe that the downtrend is here for a reason, mainly based upon the Federal Reserve. The Federal Reserve of course has begun to taper off of quantitative easing, and that of course has the world running for US dollars. On top of that, the gold markets to look a bit gun shy at the moment, and that of course work against the value the Australian dollar.
Ultimately, if we can get below the recent lows, I believe this market will go down to the 0.85 handle. It’s down there that we could see quite a bit of support, but in the meantime I feel that the markets are illiquid enough that I will probably stay out for the short-term. However, the Australian dollar could be setting up for a significant move lower, probably sometime next week.
