AUD/USD had a relatively quiet session on Wednesday as the pair flirts with the 1.06 level. We're also at the top of an up trending channel, and as such it looks as if we are finally running into significant resistance. This is not to say that the 1.05 level was in resistive, just that it did eventually give way.
We think that the action from both Tuesday and Wednesday looks like a market that once the pullback. This would make sense as the market has simply been in an upward grind for quite some time, and there is a definitive channel being drawn in the Australian dollar. We are currently at the top of this channel, so this of course suggests that perhaps we could run into a little trouble at this point in time.
Australian jobs
We have to keep in mind that the Australian employment figures come out this morning, and depending on how those are printed, we could see a significant move in one direction or the other. If we get a healthy report, we could see an attempt to break out of the 1.06 resistance level, which also would have the pair breaking out of the channel that's been part of its behavior since the beginning of June.
If we do break out of the channel to the upside, that would show a significant increase in momentum for the buyers. Moves like this are normally fairly impulsive, and are sharp. This makes me want to go long this pair if we can clear the 1.06 level on a daily close. However, if we fall I am not willing to sell this currency pair until we break below the 1.03 support level.
The 1.03 support level is underneath the bottom of the up trending channel, and shows that there is support sitting on top of support. If we manage to get below it, that of course would be a significant development in this pair and have many market participants questioning the validity of the uptrend in the Australian dollar. It is not until we get below that level that I am willing to sell. However, if we get any type of supportive action towards the bottom of the channel after a fall, or even at the 1.03 level, I am more than willing to buy this market as it is in such a healthy uptrend.