Originally published by AxiTrader
Despite the almost universal dip in industrial metals over the past 24 hours, despite copper's continuing slide to open 2018, despite the euro, pound, yen, Kiwi, and Canadian dollar all being a little weaker this morning, the Australian dollar remains well bid at 0.7836 - around the best levels since late October.
That means this morning that I am looking a little askance at the Aussie's performance as it levitates at levels that seem a little out of context with what else is going on in forex and metals markets this morning.
Of course with other positives like ebullient investor sentiment and a positive outlook toward global growth being reflected in the global stock market rally the overall support for the Aussie remains in place.
But in the short term with commodities down and the US dollar a little higher the path of least resistance for the Aussie dollar is no longer so clearly higher this morning.
That the Aussie had significant resistance around the 0.7870/75 region being the 61.8% retracement of the fall from just over 81 cents to around 75 cents is something I have been writing about this week. That area remains the key to a surge back toward 81 cents or a reversal lower.
And of course, the chance of a reversal are heightened with the dip in commodities, euro and other pairs against the US dollar.
Indeed my very short term - 10 minute - directional indicator between copper and the Aussie dollar suggests AUD/USD should perhaps even be back down at 0.7720.
But if you watch the shorter term time frames as I do each day there has been clear technical support on the one and four hour time frames this week which means that 0.7812/15 is very important support today before the overall uptrend line for this rally from 75 cents comes in at 0.7790.
Looking at the daily charts, the trend from 75 cents remains intact unless or until this support at 0.7790 gives way. A period of consolidation given the stochastic indicator is in overbought territory seems reasonable.
Whether the Aussie can hold the line though in the days ahead is going to be interesting if commodities and the euro don't recover.
Have a great day's trading.