The AUD/USD pair initially shot higher during the day on Thursday, but found enough resistance above at the 0.9450 area to turn things back around and form a shooting star. The shooting star of course is a very negative sign, and as a result I believe that the market should pullback from here. I don’t necessarily believe that we are going to break down, but breaking below the bottom of the range for the day would have this market looking for value below. With that being the case, I am looking for support below and supportive looking candles in order to get involved. We could however stay within the range that I have marked out on this chart, with the 0.92 level on the bottom, and the 0.9450 level on the top. Either way, buying right now is almost impossible, as I believe that the 0.9450 level should continue to offer resistance, and I also believe that the resistance area probably runs all the way to the 0.95 level as well.
Watch the gold markets.
The gold markets have been doing fairly well over the last 24 hours as well, which of course can move the Australian dollar in and of itself. With that being the case, I feel that the market will follow what happens in the gold markets, but there could be a lot of choppiness just above in both the Australian dollar and the gold markets themselves. Because of this, anticipate a lot of volatility but I do think ultimately that this market will go much higher. The real question is whether or not we can do it now, or later.
One potential hand is the fact that the last pullback reversed almost immediately and never got below the 0.93 handle. That’s normally a sign that the buyers are starting to take over, and quite frankly I’m kind of surprised that we formed a shooting star. Nonetheless, I don’t really want to sell, I would rather look for supportive candles below as I believe that the Australian dollar will continue to gain overall.