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The Australian dollar rallied quite significantly during the trading session on Friday, reaching towards the “fair value” level in the overall consolidation that we had seen previously. It looks as if the 0.7150 level is going to continue to offer a lot of resistance, so I think at this point it might be difficult to break above there. However, if we do it would be a very bullish sign and could send the Australian dollar much higher. Ultimately, I think that this is a pair that will continue to be very noisy, but I also recognize that it has a lot to do with the US/China relations, which of course has a significant amount of influence on what happens in Australia as the Aussies are major suppliers of commodities to China.
I think at this point, we are more than likely going to see sellers step in, and if they don’t here, I suspect that the 0.72 level will also be very resistant as well. I’m simply looking for a selling opportunity to get involved in the market, but I am flexible enough to realize that if we were to break above the 0.72 handle, then the market could go much higher. That would obviously change the entire thesis at this point. Selling the rallies has worked for some time, there’s no reason to think that will be any different here.
This article was originally posted on FX Empire