The Australian dollar has rallied significantly during the trading session on Friday, confirming a “W pattern” on the hourly chart. When measured, it suggests that we will probably go to the 0.7475 handle, and I certainly think that the 0.75 level above is going to be resistance as well. At this point, I think that the sellers will become a bit aggressive in that area, especially considering that the other risk appetite markets seem to be struggling a bit against the US dollar. The Australian dollar is showing more resiliency than many other currencies, so it’ll be interesting to see how far this can run.
I believe that the 0.7350 level is massive support, based upon weekly charts. It’s not a huge surprise to me that we got a nice bounce from here, because if nothing else it is a technical bounce. But I also expect that the 0.75 level is going to attract a lot of attention, so at the first signs of exhaustion near that level, I would be a seller. Alternately, if we can break above that handle, that would be a very bullish sign and could bring in a flood of new buyers. Overall, I think short-term buyers will run the show, but eventually bearishness will return.