Australian dollar initially rallies, then fails on Friday

The Australian dollar has rallied initially during the trading session on Friday, reaching towards the 0.78 level. This is an area that of course is a large, round, psychologically significant number, so it makes sense that we pulled back a little bit. However, by rolling over the way we did it’s likely that we are going to form a bit of a shooting star for the daily candle, and that of course is a negative sign. Nonetheless, I believe in buying dips, not necessarily selling this market unless of course we get some type of massive headwind in the risk appetite of traders.

Any type of supportive candle underneath could be a reason to start buying, just as a bounce would be. I expect to see a lot of noise in this general vicinity, and I believe that we could bounce from here and continue the uptrend, but even if we break down I believe that the 0.77 level is going to be support as well. That being the case, pay attention to the gold market, because it of course has a longer-term correlation that is very positive to this market. I believe that eventually we should go to the 0.80 level, perhaps even the 0.81 level. I think you can count on volatility regardless what happens, so given enough time, I think you can be a buyer, but I would start out relatively small and add to my position as we go higher.