The Australian dollar has rallied significantly during the trading session on Thursday to pressure a major selloff level that has been crucial more than once for the market. Because of this, I think it’s setting up for a very noisy Friday. It will be interesting to see whether or not we can continue to go higher, or if we sell-off in some type of concern. The job number will throw chaos into the market as per usual, and now it looks like we are at such a crucial level that this could be quite pronounced.
With this in mind, if we can break out to the upside it could open up the possibility of a move to the 0.74 level, but we could see a run higher only to see it fall apart as soon as the jobs number is announced. In other words, Friday is going to be a great day to lose money if you are not cautious. The absolute volatile nonsense that we continue to see in the market is going to be a problem going forward, and I don’t see how Friday is going to be any different. We may see this as a situation where the US dollar gets crushed, only to turn around and rally quite viciously once we get to the top of the longer-term range. Because of this, you need to be very cautious with your position size, because a day like Friday can get you into a lot of trouble.
On the downside, the 0.7150 level is going to be significant support, so if we were to break down below that level it would be extraordinarily negative for the Australian dollar. I think at this point, it’s anybody’s guess as to how the markets cannot behave after the jobs figure, as I think if you are trying to put on trade ahead of time, you are going to be gambling. That being said, certainly looks as if there is a lot of upward momentum so that is something that should probably be kept in the back of your mind. The markets will remain volatile, but I look at this as a potential “buy on the dip” situation now that we are starting to clear so much in the way of downward pressure. The size of the candlestick is also worth noting.
