By: Christopher Lewis
The AUD/USD pair has been following the commodity trade quite well lately, and this past couple of sessions has been no different. As the concerns about whether or not the Fed will introduce more quantitative easing enter the market, the Dollar has enjoyed a bit of a boost overall as the market may have already tried to price it in.
The AUD/USD is a bit of a different animal than a lot of other pairs at the moment, mainly because of the nature of the gold markets to the Aussie dollar. The gold markets have been a bit soft lately, but the overall trend is to the upside and the same can be said about this pair. The fact that the Federal Reserve may or may not ease will play a part in this market, but the reality is that even if the Fed doesn’t ease and the Dollar gains overall, the gold markets will continue to get a boost because of the other three large central banks in Japan, Europe, and the United Kingdom engaging in easing of their own. With that will come demand for gold regardless.
Hammer @ 1.05
The daily candle for Monday has formed a bit of a hammer at the 1.05 level, and this shows that there is significant support for the Aussie going forward. The area is also the 38.2% Fibonacci retracement level, and this could be a sign of buyers trying to step into the market that missed the breakout from the 1.04 level. This level was the top of an ascending triangle that measures a move all the way to 1.12, so I am still bullish of this pair in general.
.png "AUD/USD daily 3/13/12")
The 1.04 will be the general area that has to give way in order for me to rethink the market. The daily close well below that level would be a signal that something has changed, and I would be thinking sell at that point. More likely, I will be buying on a break of the highs from the Monday session as it shows a complete failure to break the pair down.