Aussie dollar falls only to find support late in the week

The Australian dollar has fallen a bit during the week, breaking below the 0.75 handle, only to turn around and form a hammer. The hammer of course is a bullish sign, but we also have broken below a significant uptrend line that goes back a couple of years recently, so I think that the uptrend line above will probably be resistance. If we were to break above the 0.77 level, then I think the Australian dollar continues to go much higher, perhaps the 0.81 handle.

The alternate scenario of course is that we break down below the hammer and unwind quite drastically. I think that the market could go to the 0.7250 level, an area that is significant support. Pay attention to the gold markets, because they of course will have a major influence on where the Australian dollar goes as per usual, which will more than likely be reflected in the reaction to interest rates in America. After all, if the US dollar climbs due to higher interest rates, that will push go lower, which drags the Australian dollar with it. I think we may get a week or 2 of strength, but I would not be surprised at all to see this market roll over near the trendline. I anticipate that it’s probably going to be an easier market to trade from a short-term unless the bottom of the hammer gives broken, which is a breach of major support. Otherwise, we will have to wait to see what the trendline reaction is.