The fight over the next week or so could determine where the Aussie goes longer-term.

• The AUD/USD currency pair has rallied significantly again during the training session on Thursday to reach the 200 Day EMA.
• The 200-Day EMA is offering a bit of dynamic resistance, and at this point, it’ll be interesting to see how Friday turns out.
• We have seen a major move higher by the Aussie dollar, but it will be the follow-through and what happens heading into the weekend that will truly give us a bit of an idea as to where we are going.

If we break above the 200-Day EMA, then it’s likely that we could look to the 0.73 level. The 0.73 level being broken to the upside could be a bit of a trend change, but right now I think that we have a battle setting up in the bond market that is going to continue to cause a lot of volatility. Bond markets continue to set up the next trade, and right now it’s worth noting that interest rates have dropped, but if they turn around and rally in the United States, that will send this pair lower.

The interest rates falling could send this market much higher, perhaps ready to head into a bullish move. That being said, the market is likely to continue to see a lot of volatility regardless, and if we did break above there, it could send the Aussie dollar looking to the 0.78 level. This could also be influenced by the commodity markets, and maybe even gold. Regardless, I think the fight over the next week or so could determine where the Aussie goes longer-term.

Another thing to worry about at this point is going to be the bank runs that we see in China, and therefore any damage to the mainland Chinese economy. If that economy starts to fail, it will have a huge influence on the Australian dollar and could send this currency much lower. In general, although this pair has been very bullish, it’s worth noting that the rest of the major currencies aren’t necessarily as strong against the greenback, so you will have to be very cognizant of the fact that typically all markets come back to correlations again. In other words, although the Australian dollar is probably the strongest currency right now against the US dollar, it’s not necessarily something that I am willing to jump in right away.

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Looking at this chart, we have much further to go to the upside than down, but if we were to break down below the $100 level, then it would be a very negative turn of events.

The West Texas Intermediate Crude Oil market rallied after initially falling on Monday to show signs of life again. The WTI Crude Oil market is approaching the $110 level and by extension the 50-day EMA. If we can break above all of this, and there is nothing on this chart that suggests that we cannot, then it’s likely that the market will go home much higher. At that point, it’s very likely that the $120 level gets targeted. That’s an area where we have seen resistance previously, so it does make sense that it makes for a nice target. Furthermore, it’s likely that we could even eventually break above there.

When you look at this chart, you can see that the market has been in an uptrending channel for a while, and there is nothing that suggests this attitude is going to change. That being said, if the market were to break down below the $100 level, that would be very negative, perhaps opening up even more selling pressure. The $100 level not only has the previous action around it, but it also has a significant amount of psychological input.

The market breaking above the 50-day will be a sign that we are ready to continue going higher, as it has a certain amount of interest that algorithmic traders will pay attention to it as well. Demand for crude oil will continue to strengthen, especially as the attempts to get the UAE to pump more crude oil seem to be somewhat fruitless by both France and the United States. In other words, the supply is going to continue to dwindle. Furthermore, the Strategic Petroleum Reserve of crude oil in the United States is at the lowest level since 1986, and that does no good whatsoever to help the idea of the market trying to pull back. Ultimately, I think that oil has further to go, and especially now that we are in the midst of the “summer driving season” in the United States, demand will certainly pick up again. Looking at this chart, we have much further to go to the upside than down, but if we were to break down below the $100 level, then it would be a very negative turn of events.

At this point, I have to think about pullbacks as potential buying opportunities, until we get below the 50-day EMA.

The Nikkei 225 rallied significantly on Thursday to break above the 200-day EMA, and perhaps just as importantly, has broken above the top of the shooting star from the previous session. This is a market that has recently escaped a down-trending channel, which suggests that the Nikkei 225 could make a bigger move toward the ¥28,300 level.

If we turn around and fall, the market is likely to go looking to the ¥27,000 level. The ¥27,000 level also has the 50-day EMA approaching it and rallying. That should be a little bit of a dynamic support level, so if we were to break below all that, the market more likely than not will drop to the ¥26,000 level. The market will remain very noisy, but it does suggest at this point that the Nikkei 225 is going to be a bit higher from what we can see. We need to make the breakout in order to put money to work, and I would be cautious about building a huge position anytime soon, but I think given enough time you could build up a bigger position if we finally break out. This will be especially true if we break above the ¥28,000 level.

On the other hand, if we see this market break down below the 50-day EMA, it’s likely that the market will drop to the ¥26,000 level, perhaps even down to the ¥25,000 level. This would be more likely in reaction to a general selloff. The risk appetite around the world is all over the place, and you need to pay attention to the other stock markets. If we start to see a lot of negativity in some of the major indices, that would more than likely have a bit of a “knock-on effect” over here. On the other hand, if the Japanese yen continues to see losses, that could be good for the Nikkei 225, as the exporters in Japan will be much more competitive. Pay close attention to the USD/JPY pair, because if it continues to go higher that may be reason enough for exporters to climb in Japan. At this point, I have to think about pullbacks as potential buying opportunities, until we get below the 50-day EMA. At that point, we have to reassess things.