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Australian dollar has a strong week

Christopher Lewis

The Australian dollar initially fell during the week but found enough support at the major uptrend line to turn things around and rally significantly. That’s a good sign, as it looks like the overall trend is still intact from late 2015. I believe that the market should continue to be very positive over the longer term, and of course if gold can start to rally that should help as well. Remember, the correlation between this pair in the gold market remains very strong over the longer term.

The alternate scenario of course is that if we break down below the uptrend line, which is also where we have 3 long wicks from the previous 3 candles. If we were to break down below that area, I think that this market could unwind rather significantly, with the 0.75 level targeted next, followed by the 0.7250 level. However, it certainly looks as if the buyers are still in control, so I think we are more likely to see higher pricing than lower. I don’t have any interest in shorting this market until we break down below those candles, so it’s likely that I will find myself long of the Aussie this coming week. That isn’t to say that it will be a straight shot higher, but certainly for the longer-term investor they will have the ability to profit if they are patient enough to allow the trade to work itself out.

AUD/USD Video 16.04.18

This article was originally posted on FX Empire