The AUD/USD pair fell during the session as the risk appetite of the markets fell on the whole. The end of the session saw a little bit of a bounce in this market, and the resulting candle is a pseudo-hammer. The bounce came off of the 38.1% Fibonacci level, and this action suggests that we may be seeing a windup to continue the trend higher.
The level that we bounced from is also in the neighborhood of 1.05, and this shows the power of the “round number” in this pair as well. The market looks like a sizeable amount of buying stepped into the arena at that level, and this would suggest that a continuation of the uptrend is about to happen. The pair certainly has been strong lately, and this most recent pullback appears to be just that – a pullback.
The 1.04 level below is massive as far as our perspective is concerned. The level is where the market broke out to the upside from the ascending triangle back in January. This move projected a run to the 1.12 level, and this is a target that we still believe in. The breaking below 1.04 would change our minds, but we think it will be very difficult for the bears to overcome this level as there should be plenty of people that want to get involved at that level.
The 50% Fibonacci level is just under that handle as well, so this will prove to be doubly supportive. This market is in an uptrend by all means, and as a result we only buy this pair. The commodity trade will continue to fuel this pair as long as it is in vogue, and the gold markets are of particular interest as the correlation between it and this pair is very high. As long as there is interest in gold, this pair will be buoyant on the margin.
The pair is a buy for us on a break of the top of the Monday highs. If the market moves lower than the Monday range, we are willing to wait and see if we get the supportive price action we want to buy closer to the 1.04 level. We aren’t selling yet.
Written by FX Empire