The Australian dollar has rallied during the session on Monday, breaking above the 0.74 level. We found a bit of resistance at the 0.7450 level, and then dropped.

However, I think that the 0.7425 level offering resistance previously should now offer a bit of support. I believe that the 0.74 level underneath will also offer support, so some type of supportive candle or a bounce in the general vicinity might be a nice buying opportunity. Obviously, the Australian dollar is a bit attached to risk appetite, so we need to have a bit of positive attitude when it comes to the stock markets and of course the futures markets in general.

Obviously, gold (GLD, quote) is also something that you should be paying attention to as the Australian dollar (FXA, quote) has such a strong correlation to what the market is doing. We had a lot of bullish pressure in the gold market during the day on Monday, that of course propelled the Australian dollar.

Higher highs

If we can break out to a higher high, clearing the 0.7450 level, the market should go looking towards the 0.75 level above which of course has a certain amount of psychological significance. Ultimately, the market seems to have quite a bit of support underneath, so it’s not until we break down below the 0.7380 level that I would be selling this market going forward. The US dollar of course will have an influence as well, so keep an eye on these things, but right now in the short term it looks as if the Australian dollar is showing signs of life, and therefore I believe that the momentum is probably something that you should be paying attention to as many of the Forex pairs right now are going sideways in general.

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.

Content curiosity of FOREXCycle