The AUD/USD pair rallied during the session on Wednesday, but as you can see the 0.93 handle was far too resistive in order for the market to continue higher. The resulting daily candle is a shooting star that suggests that this market may not be able to bounce enough to provide a selling opportunity higher. Nonetheless, we believe that this market should offer massive amounts of resistance at the 0.95 level if we can get there. On the other hand, anywhere between here and there probably is going to be somewhat resistant as the downtrend has been so strong lately.
What’s interesting to us is the fact that there are two hammers that have formed on both Monday and Tuesday in this pair, suggesting that we were going to get a bounce. The fact that we could not bounce higher from here and hang onto those gains does not look good for the Aussie dollar. During the same session, gold lost well over $40 an ounce, so that of course would’ve had a negative influence on the Aussie dollar.
Obviously, if we break down below the lows of the Monday session, we are going to add to our already short Aussie dollar positions, and we believe that the 0.90 level should continue to be the target for the short sellers. The shape of the candle has us believing that this market is going to continue to sell any type of rally going forward, and as a result we think that possibly even though the 0.90 level might be a bit higher for the final print of this move.
Nonetheless, expect the Asian economies to continue to dictate where the Australian dollar goes, as the Aussies continue to suffer due to the fact that Asians are not buying their raw materials for economic expansion anymore. On top of that, gold markets should be watched as well as a really are starting to fall apart at this point. Both of those should continue to offer plenty of resistance to the Aussie dollar gaining in value for any length of time.