By: Christopher Lewis
The AUD/USD pair has had a rough way to go recently, with the pair falling from the 1.08 level to the 1.0350 area in roughly the last month. The pair is of course a highly risk-sensitive currency pair, and is often used as a proxy to trade the Chinese economy. The main reason of course is that Australia sends much of its hard commodities to the Chinese mainland that are used in construction and manufacturing.
As the Chinese economy expands or contracts, this will certainly have an effect on how much is bought from the Aussies, and this in turn pushes the demand for the Aussie dollar up and down. In a world that doesn’t allow an easy way to trade the Chinese Yuan, this is as close as most Forex traders can get to trading China directly.
Many forces
The Chinese economic numbers over the weekend will perhaps move this pair at the open, and if the numbers show a slowdown, this pair could gap down at the open. With this in mind, the opposite is also possible.
The pair has recently has fallen below the 1.04 level, and is sitting at 1.0350, which in my estimation is in the center of a massive support zone. The area is in the vicinity of a break out of an ascending triangle at the start of the year, and if the level holds as support – the triangle measures for a move to 1.12, which would be no small feat at this point.
.png "AUD/USD Daily 4/2/12")
The 50% Fibonacci level is where we sit. The candle for the Friday session is a shooting star after printing a hammer for Thursday. With this in mind, we could be looking at a decision area, and I believe that we will see the market’s vote on where this pair will go in the next several months. With that being said, I will be long of this pair above the 1.04 level, and if we sell off, I will simply wait for signs of support at lower prices as I see a lot of support areas below.