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Forex pairs in this Article » AUD/USD
By: DailyForex.com

The AUD/USD pair had an interesting session on Tuesday, as it went back and forth, but ultimately settled slightly negative in order to form a shooting star. What I find most interesting about this is the fact that the shooting star sits right on top of the 0.90 handle. As you can see by the attached chart, I have drawn a rectangle that I think we could be trying to form right now. While this takes a little bit of artistic license, there is certainly the possibility of this coming true.

I think if we can break down below the 0.89 handle, we will in fact drive the value of the Australian dollar back down to the recent lows. It would make sense, simply because the US dollar has been doing fairly well lately. On top of that, there are a lot of concerns in Australia, and more specifically Asia, while the Federal Reserve looks set to continue tapering off of quantitative easing.

When correlations don’t hold up, something’s amiss.

Gold had a stellar couple of sessions here recently, while the Australian dollar has simply done nothing. That for me is very telling considering how highly correlated the two financial investments tend to be. Normally, the gold markets will drive the Australian dollar in the same direction. While the gold markets have been going much higher lately, the Aussie has simply sat still. That tells me something isn’t quite right with this currency.

Because of this, I believe that the move below the 0.89 level is one that will more than likely not only test the recent lows, but could possibly pick up enough momentum to push his pair down even further. We will have to keep an eye on this market, but quite frankly something doesn’t look right, and call it “traders intuition”, but this normally means something is about to happen.

On the other hand, if we managed to break above the 0.92 level, I think at that point in time the trend will have changed, and the market will go much higher. However, I don’t expect that.

AUDUSD Daily 21914

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