The AUD/USD pair could be one of the more interesting charts as we enter the Monday trading session. Friday saw this pair selloff quite strongly, but he did in the day above the 1.04 handle, suggesting that there could be a bit of support in that general vicinity. I have been looking at the 1.03 level as a possible support zone as well, so it looks to me like we may be approaching an area that will be very difficult for sellers to plow through.
It should also be noted that we have been in an uptrend channel for some time now, since roughly the beginning of June, and as such we are approaching the uptrend line or the bottom of the channel.
Channel defined trend
This move has been relatively relentless, and the channel has certainly defined the trend since the beginning of June. It has held up very comfortably for the entire summer, so we have to expect that the support line that the market is currently sitting on top of should be fairly strong. I have stated numerous times that I believe the 1.03 level is pretty massive and support as well, and as such I am not looking to sell this pair right now.
I actually expect to see some type of supportive action in the general vicinity. In fact, I would be more than willing to go long on some type of supportive candle if we get it in the near term. Unless we get below the 1.03 area, I am simply not comfortable selling the Australian dollar as there are so many central banks willing to print money in the near term, this has to be good for gold.
Speaking of gold, the gold markets do look like they're ready to breakout and will do so once they clear the $1640 level. The Australian dollar typically moves with gold, and as such I feel that watching both charts will be beneficial. Obviously, if we do get that supportive candle I see a lot of noise between here and 1.06, but I do feel that eventually we could see 1.08 or even as high as 1.10 before it's all said and done. If I am wrong, we will certainly see at the 1.03 level that would mean a significant turn in momentum.