The AUD/USD pair had a relatively quiet session on Monday, as we initially fell towards the 1.04 handle. However, by the end of the day we bounced enough in order to form a candle the looks somewhat like a hammer, which of course is interesting after we have had two other candles in a row that looked very much like hammers.
The 1.04 level continues offer significant support for this pair, and there is nothing on this chart leads me to believe that's about to change. It is because of this that I believe that this pair is ready to start climbing higher, but it may have more of a grind than some type of massive move in short order. Knowing this ahead of time makes hanging onto the trade much more comfortable than trying to convince you that the market is going to go straight up. Knowing this, you can allow the Australian dollar to do its work for you, and continue to pay you at the end of the day as there is a swap in your favor as well.
Consolidation
I believe that we have been stuck in consolidation between the 1.02 and 1.06 levels for some time now. I also believe that the 1.04 level is considered to be the "middle point" of the general pattern, and as a result I also believe that the fact we didn't manage to get back down to the 1.02 level recently suggests that buyers are starting to step in and higher levels.
Because of this, I do think eventually we will break the 1.06 level. It might take a while, but because of this I am willing to buy the Australian dollar at these levels. I also believe that once we break the 1.06 level that we will see a move of the 1.10 based upon that consolidation. As for selling is concerned, it's very difficult for me to do so right now as the pair looks so well supported at 1.02 and parity for that matter. Going forward, I do believe that this is simply going to be a bump in the road for the bulls.