Looking at the big picture, it appears the Daily June Australian Dollar has met a wall of resistance at a pair of tops at 1.0380. In addition, downtrending Gann angle resistance is also at 1.0380 today, making this price level a key resistance cluster.
Based on the main range of 1.0720 to 1.0150, a key retracement zone has been created at 1.0435 to 1.0502. A breakout over 1.0380 is likely to rally into this zone where it should meet resistance on the initial test of this area.
On the downside, Monday’s minor reversal from 1.0380 indicates that the selling is greater than the buying. In addition, Tuesday’s follow-through to the downside has helped form a new main top at 1.0380. This means that despite the strong rally from 1.0150, the main trend is still down since the series of lower tops and lower bottoms remains intact.
Furthermore, a failure to hold 1.0150 will signal a resumption of the downtrend and a likely test of the retracement zone formed by the major range of .9496 to 1.0720. This zone has been identified as 1.0180 to .9964. Additionally, uptrending Gann angle support is at .9986, forming a support cluster.
Zooming in on the short-term view of the Daily June Australian Dollar, traders should focus on the 1.0150 to 1.0380 range. Overnight, the futures contract has corrected back to a minor retracement zone at 1.0265 to 1.0238. Helping to form additional support is an uptrending Gann angle at 1.0230. This angle forms a support cluster with the Fibonacci level at 1.2038 to 1.0230. A break through this area is likely to trigger an acceleration to the downside.
Fundamentally, the Australian Dollar is under pressure on concern thatEurope’s debt crisis is worsening. This is leading to a drop in demand for riskier assets. Additionally, seller applied pressure to the Aussie after minutes of the Reserve Bank ofAustralia’s last meeting suggested that the central bank is ready to cut interest rates.
