AUD/USD had an interesting session on Wednesday as it reacted both positively to the idea of continued stimulus out of the United States, and negatively to the reality that it never happened. The Federal Reserve disappointed the markets with their statement, as it showed no definitive signs of easing.
This pair has been steady and its climb over the last couple months, it should be noted that we are currently in an up trending channel. The fact that we formed a shooting star at the top of that channel suggests to me that perhaps we are getting ready for a pullback. Adding to that is the fact that it happened at the 1.05 level, and you have a pretty decent sell signal in my opinion.
Because of this, I would be selling this pair at a break of the lows for Wednesday. However, it probably would be prudent to wait until after the European Central Bank announcement in the morning, as that will certainly move the markets and more importantly, risk appetite. We All know how the Australian dollar like to move in tandem with the risk appetite of traders around the world, so needless to say this pair could be moved greatly by whatever happens.
Top of the channel, aiming for 1.03
To me it looks like this pullback makes sense. But the bottom of the channel, you have the 1.03 level which of course was resistance recently. This simply looks like a nice pullback to attract more buyers as we continue higher. It's probable that the Federal Reserve will continue to use monetary policy later, and as such the markets will sooner or later express that opinion. There are significant possibilities in the near future such as: the Jackson Hole Wyoming meeting, the September meeting, and a whole plethora meetings till the end of the year.
One thing that will be important to watch is the Friday nonfarm payroll report out of the United States. Needless to say, if that number is poor, there's a chance that the market will interpret this as the Federal Reserve getting ready to ease again. Either way, I think that any fall from this point in time make sense in till we get 1.03 and at that point in time you have to be looking for supportive candles from which to buy. Obviously, if we break the top of the shooting star this would be a bullish sign and have me long as well.
