The AUDUSD pair fell during the day on Tuesday, as the 0.74 level continues to offer resistance.

That was an area that had been important to the market until Tuesday, and now that we have broken below there I think that it’s only a matter of time before we go much lower. A breakdown below the lows of the day should send this market looking towards the 0.73 handle, and then eventually the 0.70 level after that. I don’t have any interest in buying the Australian dollar until the markets look better for gold, and right now they just don’t. Because of that, there’s not much of the catalyst for the Aussie to appreciate in value.

The importance of 0.7425 above

I believe that the 0.7425 level above is massively resistive, and if we can break above there think it changes my entire outlook of this market. But in the meantime, I believe that there is plenty of bearish pressure, and the rallies will offer value in the US dollar. Given enough time, I think the 0.70 level will be very important for the market, and certainly will make a juicy target for the sellers who are so bearish of the Australian dollar. Ultimately, the US dollar has been very strong against most currencies around the world, and of course the Australian dollar will be any different, especially considering that there are a lot of concerns when it comes to Chinese demand for raw materials.

Because of this, I think it’s almost impossible to buy into we break out to the upside, and that any rally should offer an opportunity for those who know what to look for. The downward momentum has been rather strong during the Tuesday session, and typically we will see some type of follow-through after that.

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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