AUD/USD
The Australian dollar has been extraordinarily strong over the last several weeks, and it looks as if we are pressuring to the upside yet again. As you can see on the chart, I have drawn out a nice up trending channel, and it looks like we are going to continue to go much higher. Although we are overextended a bit in the Aussie dollar, this is an area that will attract a lot of attention as the 0.80 region has been a fulcrum for price going back to the late 1980s. I think that the market is trying to tell us that it does not want to sell off, and even if it did, there should be plenty of support underneath. I would welcome a selloff, and both the Australian dollar in the gold markets, and take advantage of both on the dip.
I think that if we can break above the 0.81 handle on a daily close, it’s likely that we continue to go higher and test at the very least, the top of the uptrend in general. We are bit overdone, but I think this is a short-term phenomenon, and there will be plenty of people who have missed this move looking to take advantage of it once they get the opportunity. The US dollar looks as if it is in trouble against most currencies around the world, and the Aussie being so highly leveraged to the gold markets tends to move rather rapidly.
The alternate scenario of course is we get a deep correction, but even then, it should only be a correction and I think there is a hard “floor” in the market closer to the 0.75 level underneath. Not only coincides with a large, round, significant number, but it also coincides with the bottom of the channel.
