AUD/USD Forecast July 31, 2012, Technical Analysis

The AUD/USD pair rose during the session on Monday, continuing the bullish action as seen over the last four sessions. However, we are approaching the 1.05 level and it does look like the pair is starting to run into some significant resistance.

Most of this Australian dollar buying is probably being based upon the idea of monetary easing out of the ECB and the Federal Reserve. There is a chance that the central banks will this point, and it is our belief that if they do – the Australian dollar will fall as a result. There’s also talk of easing out of the central bank in China, but we have yet to see anything significant from that part of the world.

Looking at the charts, it appears that the 1.05 level will have to be overcome on a daily close in order for us to buy here. We certainly won’t sell, and do fully expect the 1.03 level acted as support from this point on. The Australian dollar is poised to take advantage of simulative programs as they appear, and although we do believe they will – there is a chance that the central banks will act as fast as people wanting to. This would lead to pullback, but we think in the end this would be an excellent opportunity to buy the Australian dollar on the cheap.


Also of interest, is the fact that we have an up trending channel that has been in place since 17 June roughly. We are currently at the top of that channel, so pullback is very possible. The bottom of this channel lines of pretty close to the 1.03 level, and as such this gives us even more conviction to buy on a retest that area that prove supportive. In fact, that is essentially what we are waiting for – cheaper prices on the Australian dollar. We are not selling at this point in time, and don’t even envision a scenario to do so. We think that the breaking of the bottom of this up trending channel would have to be accomplished on a daily close in order for us to even consider selling now.

Written by FX Empire