By Stephen Cox
The Australian dollar has a lot of upside room against the U.S. dollar, but the charts, as I read them, may be hinting of a corrective lower move presently.
Certainly the Aussie’s technical strength is convincing.
The Australian dollar rose earlier Monday to $1.0780, a new post-1983 float high. That high in fact is the Aussie’s highest level against the dollar since it fell to the 2001 low of AUD0.4773.
On March 28 when the Aussie recorded a new high at $1.0318 I wrote in this column that the ten-year uptrend might be going for nothing less than a test of $1.1862 which I believe is target resistance on the annual chart.
On the other hand, traders with a less expansive outlook on this market might be preoccupied now with the fact that Monday’s long-term high of $1.0780 is little different with Thursday’s high of %1.0777.
In other words technical resistance is building on the daily chart.
I estimate that a decisive move below daily support at $1.0600, if it comes to that, would point the Aussie down to $1.0420-$1.0245 support band.
Observers note that the Aussie’s strength lately has been influenced by commodity prices. Comex June gold, which rose to a record $1,519.20 an ounce earlier, comes to mind in this case.
Presumably, the fire under the gold market is precisely the weak dollar, and so it goes.
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