The Aussie and gold are continuing their dance to the bear. Both are trending downward, with a steep intraday trajectory. It is difficult to overstate the importance of the gold/AUD correlation. Australia is a world-leading gold producer — when the price of gold tanks, typically so does the Aussie. That is the scenario for today, as April gold futures are off 80 ticks and headed for the 1315.0 handle.

In a live market update from yesterday, I outlined a key area of downside support for the AUD/USD. The timing of the recommendation was fortunate, as the long trade did not go live during the session. A firm break beneath Wednesday’s low has fostered a significant move to the downside.

AUD/USD Technicals

For the session, the Aussie has posted a negative 50 pip run and is looking for more. At press time, price is pushing intraday lows at .7820.

There are several keys in this market that will determine pricing for the near future:

• Gold is in the midst of a short-term downtrend. As gold falls, so will the Aussie.
• Price has broken beneath the three support levels I emphasized yesterday. With no valid downside support, price is likely to seek out and consolidate near big round numbers.
• Wednesday’s top of .7916 will become a daily swing high on today’s close. Look for an abundance of stop out orders related to new position shorts above this level.
• Wednesday brought us a Bollinger MP/ Daily SMA crossover. This is a bearish signal and possible precursor for a test of the Swing Low at .7712.

Overview: A position short may setup for Friday’s session. Depending on where this market closes today, selling from the Daily SMA with a large stop to the topside may be the play going into the weekend. Stay tuned.