Investing.com - Financial Markets Worldwide

Drop In Demand For Higher Risk Pressuring June Australian Dollar

ByThe Pattern, Price & Time Report
AuthorJames Hyerczyk
Published 03/29/2012, 05:35 AM
Updated 05/14/2017, 06:45 AM

After reaching 1.0461 on Tuesday, the June Australian dollar reversed course to finish lower for the day. The move came as no surprise since the main trend is down and the market was nearing retracement zone resistance at 1.0517 and a former top at 1.0529. In addition, downtrending Gann angle resistance would have probably stopped the rally at 1.0530.
Daily-ADM-Chart
Overnight, the Australian dollar broke through an uptrending Gann angle at 1.0336 indicating weakness. The break put the currency squarely on a downtrending Gann angle at 1.0320. A trade below this angle will weaken the market further while putting it on a course to reach a major 50 percent price level at 1.0108 on April 11.

The first leg down from the 1.0720 top was .0406 in 10 market days. A similar move from the 1.0529 top on March 19 will take the June Australian Dollar to 1.0123 on April 2 (See X). At this point, price and time will balance and the market may embark on another short-covering rally.

Fundamentally, the Aussie dollar weakened overnight as Asian stocks retreated from Tuesday’s high. With demand for higher-yielding assets falling, traders are expecting the move to continue into the New York trading session.

In addition to the weakening global equity markets, concern that Chinese manufacturing may slow over the near-term is putting further pressure on the market. Demand for Australian resources is expected to fall which is making traders cautious about holding long positions.

Traders will be watching Wednesday’s U.S. Durable Goods report today for clues of a strengthening economy. A strong report will underpin the U.S. dollar while pressuring the Aussie.

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