Australian dollar sideways on Monday

The Australian dollar has gone sideways during most of the Monday session, and in a relatively tight range. I believe that the market will eventually rally though, because we have formed so many hammers on the weekly chart. That of course is a very bullish sign, and I think there is a significant amount of support down to the 0.75 handle. This could be perhaps in anticipation of good news coming out of the US/North Korea summit, or perhaps even just and oversold attitude when it comes to the Australian dollar. The fact that we have formed so much in the way of support underneath tells me that it’s only a matter of time before the buyers get involved.

I think at this point, it’s likely that value hunters will come back into this market every time we did, trying to pick out bits and pieces of value. I believe that the markets will eventually take out to the upside as we have been leaning in that direction anyway. If we were to break down below the 0.75 level, then the market could break down rather significantly, perhaps unwinding several handles. I currently rake this at about a 5% likelihood, but we always need to be prepared for any type of shock announcement. In the short term, I believe that we will go to the 0.77 level above, an area that has offered a little bit of resistance during the previous week. If we can break above there, then we can continue to go towards the 0.78 level.