Australian dollar shows a bit of life during the week

The Australian dollar spent most of the week falling, but later on we ended up finding enough support underneath the vital 0.75 level to turn things around and form a massive hammer. This of course is a very bullish sign, but we have the previous uptrend line just above that could cause a bit of trouble. If we can break above the uptrend line, and extensively the 0.77 handle, the market could continue much higher. This is a very interesting level to see this hammer, and the fact that it was preceded by a hammer from the previous week tells me that there is a lot of interest in this area, and obviously people are defending the level.

Pay attention to gold, it has its usual influence on the Australian dollar as per usual, and I think it’s only a matter of time before that market will influence what happens here. I think that this is a very strong signal that we are at the very least going to bounce from here, so I do think that the buyers will run the show for the next week or 2. The question is whether we can break above that resistance. The alternate scenario of course is that we break down below the bottom of the hammer from the week, which would be a very negative sign, perhaps sending this market down to 0.72 over the next several weeks, perhaps even lower than that. That was a rather significant trend line break, so I believe this may be a short-term reprieve.