Australian dollar consolidates on Tuesday
The Australian dollar has gone back and forth during the trading session on Tuesday, as we had broken below an uptrend line, which of course is a very bearish sign. This uptrend line goes back towards the end of 2015, so it of course is something that is worth paying attention to. However, we have not picked up momentum, and that has me wondering what happens next. Because of this, and the highly volatile possibility of either a reversal or some type of breakdown, we are probably best waiting for some type of move to happen before following.
If we can break above the 0.7650 level, then I think the market has proven itself to be supported and we should go higher, perhaps for a longer-term move. However, if we were to break down below the 0.7575 handle, the market will more than likely go to the 0.75 handle, and then perhaps lower than that. In fact, I think it’s likely that if we break down we will not stop the 0.75, except for some type of short-term bounce. Three-year trendlines don’t get broken without some type of action. Ultimately, I think that your best sitting on the sidelines and allowing one of these levels to be broken before putting money to work. In fact, I believe that it is a longer-term signal, and one that could be very profitable if you are patient enough to wait for it to happen.