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AUD/USD Daily Outlook - Mar. 12, 2013

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

AUD/USD had a strong session on Monday as the bullishness in risk assets came back slightly during the session. The 1.02 level acted as support again, and this would have been something that a lot of you will have been anticipating. In fact, the 1.02 level has been support for some time now, as the larger consolidation area between it and the 1.06 level has been the norm for this market over the last several months.


The most important candle on this chart to me is the one that formed on Monday of last week. This hammer was a serious attempt to break the pair down, and as you can see it failed. This shows just how important that the 1.02 level is, and as a result I think we are trying to form a “base” at this level.

The accumulation phase could be what we are seeing, and with a clearly defined area like this – I like the odds of going long at this point. However, I would prefer to buy on a short-term pullback as it allows the pair to gain a bit of momentum in order to break out and above the 1.03 handle, which has been short-term resistance.

Gold

Interestingly enough, the gold markets are starting to look very similar. This is interesting as the AUD/USD and gold markets typically have a very strong correlation. When the AUD/USD pair goes higher – typically the gold futures markets will as well. This doesn’t have to be the case, but it is fairly common.

The pattern that we have seen recently make me think we are trying to build a base simply because of the fact that we haven’t had a large bounce, but rather have been chipping higher. This is indicative of accumulation over all, and because of this I think that going long this pair might be something that a certain amount of patience will be required. Nonetheless, the longer-term trend is certainly to the upside, and the swap is positive, so sitting on this trade isn’t a huge deal.

If we manage to break the bottom of the hammer form last week, this would be a very negative connotation, and probably send this pair much lower.

AUDUSD Daily

Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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