The Australian dollar try to rally during the session on Tuesday, but found enough resistance above the turnaround for a bit of a shooting star.

I believe that the market will continue to try to rally though, but the volatility should continue. With the Federal Reserve meeting during the session today, it’s likely that we will continue to see choppiness, and therefore we could see a bit of consolidation between now and the statement. I believe that the 0.75 level underneath offer support, so it’s not until we break down below there that I would start selling. A break above the top of the range for the day is very bullish, includes in this market looking for the 0.76 handle after that. Alternately, I do think that this market will break down to the upside as we are starting to see stronger activity in the Gold markets, which course has a bit of a knock-on effect over here.

Volatility, yet upward bias

I believe that the best way to describe this pair is that it’s volatile, yet but it has an upward bias. If we can break above the 0.76 level I think that we then go looking for the 0.7650 handle, followed by the 0.78 handle. Above there, we could go as high as the 0.80 level which is a massive pivot point for longer term charts, going back decades. I believe that the market will eventually find its way back there, as it has done for years, but it will of course be choppy and noisy on the way. If we did breakdown below the 0.75 handle, I believe that it is a short-term selling opportunity, probably only good for about 75 pips.

Editor’s Note: Equity investors/traders can use the Currency Shares Australian Dollar Trust (FXA, quote) ETF to take positions in the Aussie dollar without a FOREX account.  The ETF looks to track the price of the Aussie dollar (AUDUSD), minus ETF fee. The fund seeks to reflect the price of the Aussie dollar (AUDUSD) with the shares representing a cost-effective investment relative to investing in the FOREX market.

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