AUD/USD Forecast June 28, 2012, Technical Analysis

AUD/USD rose during the Wednesday session as risk appetite expanded ever so slightly. The bounce that has happened over the last 48 hours shouldn’t be much of a surprise as we pointed out the hammer that form at the parity level. The 50% Fibonacci retrace, while going in the other direction one station just at the parity level and often these will act as port as they were previous resistance, much like a round figure.

Currently, the Australian dollar will be greatly influence by the issues going on in Europe. This is because the markets have reached a one to one correlation ratio between riskier assets and risk in general. In other words, if something isn’t considered a “safe haven asset”, it will be sold on bad headlines. This is true for the Australian dollar, as it is so heavily connected to commodity markets.

With this being said, we still don’t like the long side of this trade until we can make a new high above the 1.02 level. The candle from Thursday of last week still looks rather vicious, and certainly mean something as it was such a strong move. It would take a break of that in order for us to be comfortable buying this pair. In the meantime, we think that short-term traders will certainly take advantage of the obvious port at the parity level, but for us it is just a little bit too choppy and adding to that fact we have the European summit and its potential risk in the headlines, and we just feel more comfortable sitting out.

Looking at the charts on the longer-term, we feel that parity is probably where the pair wants to be at the moment. It is an inflection point of sorts, and it makes sense that we are parked here. Again, we are willing to buy on a daily close above the 1.02 level, but just as importantly we are willing to sell on a break below the Monday lows as it would signify the violation of a hammer. In the meantime, watch the headlines out of Europe and the market’s perception of them.

AUD/USD Forecast June 28, 2012, Technical Analysis

Written by FX Empire