The Australian dollar has rallied ever so slightly during the trading session on Tuesday to show a little bit of resiliency after forming a massive shooting star from the Monday session. That being said, the 0.78 level underneath should continue to be important, as we had previously seen a massive resistance barrier in that form. All things being equal, this is a market that seems to be very supportive, but we also have obvious resistance above.
Underneath, the 50 day EMA is looking at the 0.7722 handle and turning higher. The 50 day EMA has offered plenty of support underneath previously, and it does suggest that we are going to continue to see buyers in that region as well. In other words, I like the idea of buying short-term dips in this market, as it is almost certain that we will find plenty of value hunters. The 0.80 level above is a major resistance barrier on the monthly chart, and it does make quite a bit of sense that we would see markets pay close attention to that area, as it extends to the 0.81 level. If we can break above all of that, the market is likely to go higher, opening up the possibility of a huge move to the 0.90 level.
Remember that the Australian dollar is highly correlated to the commodity market situation, which of course is very strong. Furthermore, the US dollar has been getting hammered, so that of course helps the Aussie rally a bit as well. All things being equal, I think this is a market that will find buyers on dips on that point alone. If we break above the top of the shooting star of Monday, that would be a very bullish sign, allowing for that move towards the 0.80 level.
If we were to break down below the 50 day EMA, then it opens up a possible move down to the 0.76 region where we should see plenty of support that extends down to the 200 day EMA. At this point in time, the market should continue to go much lower, so that of course would be a major shift in attitude and trend to say the least. As things stand, the Aussie has been so resilient that it is difficult to bet against it.
