AUD/USD Forecast March 28, 2012, Technical Analysis

The AUD/USD pair fell on Tuesday as the “risk off” trade came back into the markets. The market continues to look healthy though, and even with the selloff there are multiple reasons to consider owning the Aussie in general. The Aussies always tend to gain from the liquidity injections that central banks are so adamant about, and the commodity trade will be closely watched.

The gold markets as well will be watched for future direction of this pair. The Federal Reserve seems ready to continue to pump easy money into the markets, and this should continue to give gold a boost, and in turn the higher yielding currencies such as the Aussie dollar. The trend is most certainly up in this pair as well, so this jives well with the overall theme of the market during the last 6 months or so.

The 1.04 level has proven itself to be supportive, and it had several reasons to be so. The level was also the site of the 38.2% Fibonacci retracement level and as such the Fib traders will have been interested in this spot. It was also the site of a breakout of the massive ascending triangle that began this latest move upwards. The pullback to the level should only reinforce the importance of the mark to many traders out there.

Adding to that is the 200 day EMA being in the vicinity of 1.04, and you have a clear area for a “line in the sand” for the bulls. With all of these things lining up, it is one of our favorite charts at the moment. The chart is essentially binary: It is a long only market above the 1.04 level, and a sell below it. Of course, there are many other factors and nothing is ever 100% in Forex trading, but the fact is that it isn’t everyday that the variables all say the same thing.

The pair will be bought on pullbacks by us until we see a daily close below the above mentioned 1.04 level. The target from the ascending triangle was 1.12, and we still think that the level will eventually be seen.

AUD/USD Forecast March 28, 2012, Technical Analysis

Written by FX Empire