Aussie dollar shows signs of strength on Friday before turning around

The Australian dollar has rallied initially during the trading session on Friday, reaching towards the 0.7575 handle, which has been resistance previously. We have rolled back and bent to show signs of exhaustion, but I think there is also support at the 0.75 handle. The hammer on the weekly chart of course suggests that we are going to go higher, but we need to break above the 0.7575 handle to continue the bullish pressure. However, one of the biggest problems is that we have a previous uptrend line above that should offer resistance. It’s not until we break above the 0.77 handle before we get the “all clear” to start buying. It will take a while to get above there, so ultimately I think that short-term momentum traders could take advantage of a short-term break out to the upside, but I believe that you need to be cautious about doing so, recognizing that there could be a lot of selling pressure above.

Pay attention to gold markets, they of course will have a major influence on where the Australian dollar goes, and of course interest rates in the United States rising or falling will affect the greenback, and I think that’s the crux of the argument here: what’s happening with the greenback in general. I think the greenback has shown a significant amount of strength recently, but perhaps a bit of a reprieve is coming, at least for the short term.