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AUD/USD initially attempted to rally during the week only to find massive resistance at the 1.03 level which has been both resistive and supportive in the past. The shooting star that for the week, confirms that we still have plenty of concerns out there involving anything risk related. With this in mind, we are looking to sell the Australian dollar if it breaks the bottom of the weekly candle that just formed. A break above the top of that same range would of course be very bullish, but we suspect that is the least likely of the two scenarios.
While we don't necessarily think a meltdown is coming, a drift lower would make sense. We expect supportive action at the parity level, so any pickup at that level surprising nor wouldn’t be concerning. Because of this, we fully expect to be short of this market soon, and with the array of European economic announcements coming next week - we could have a good catalyst for a risk off trade.