Australian dollar explodes to the upside on Monday

The Australian dollar has broken out to the upside, reaching towards the 0.7650 level, before pulling back slightly. On the weekly chart, we have formed several hammers in a row, and that of course is a very bullish sign. I think it’s very likely that we will see a move higher based upon not only the explosive move in the last 24 hours, and of course those hammers that tells me that there is a hard floor below. I think that the Australian dollar could go as high as the 0.77 level above, which is the next major resistance barrier that I see. I think that it will be a bit of a choppy market, especially considering how strong the US dollar had been previously.

I believe that the 0.76 level should offer a bit of support, and that we should continue to go back and forth. I think that if we can break above the 0.77 level, then we have an opportunity to go much higher. Ultimately, this is a market that should continue to be very noisy based upon risk appetite, but I do believe that the longer-term outlook for this market will be sorted out in the next several weeks. Be nimble and be careful about your trading size in the meantime as it is going to be noisy and dangerous. I believe that the 0.75 level underneath is the “floor” in the market, and if we break down below there we could unwind.