The Australian dollar initially pulled back during the course of the trading session on Thursday to reach down towards the 50 day EMA. Ultimately, it looks as if the market is trying to build up enough momentum to finally break above the 0.78 handle, which of course is the massive resistance barrier that the market has been fighting for some time. All things been equal, the market breaking above there could open up the possibility of a move to the 0.80 level given enough time. That of course is an area that is important from a longer-term standpoint, as you can see it clearly as resistance on the monthly chart.
AUD/USD Video 07.05.21
Ultimately, if we can break above that 0.80 region of resistance, this market will go much higher. It would then become a “buy-and-hold” situation, but overnight China decided that they were going to end all discussions involving trade with the Australians, so there was a little bit of a selloff that lasted just a short amount of time. Ultimately, the commodity boom should continue to lift the Australian dollar over the longer term, but obviously we have a lot of noise to deal with. The last couple of months have been very difficult, and it appears that we have more of the same ahead of us.
That being said, if we were to turn around and break below the 0.76 level it is likely that we could go looking towards the 0.75 level. If we break down below that handle, then I believe that the Australian dollar probably needs to “reset” closer to the 0.70 level which of course is an area that will attract a lot of attention due to the psychological importance of it.
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