The AUD/USD pair rose during the session on Tuesday, after forming an absolutely perfect hammer during the Monday session. The thing that intrigued me the most about the hammer on the Monday session is that it was formed at the 1.02 support level. With that being the case, it was a relatively low risk entry into the Australian dollar again. After all, a break of the bottom of the hammer would not only break the support from the Monday session, but it would also break below the 1.01 handle, a natural place to find support as it was a large round number.
During the Tuesday session, the market took off, and we found ourselves above the 1.0250 level. This was also predicated upon the idea that the Reserve Bank of Australia signal during the early hours of Tuesday that they weren't necessarily looking to ease monetary policy in the near-term. This gave people a little bit more courage when it came to owning the Australian dollar, and as a result the market ended up going higher.
Resistance just above
Just above current levels, you can see that we start to get a little bit noisy during the month of February. This could present a bit of a problem, and as a result I fully expect this market to be a bit choppy. After all, if we are forming some type of base down in this general vicinity, this of course is normally a choppy affair. Trends and significant moves like we've seen since the beginning of the year typically don't turn on a dime, so it makes sense that the next several sessions could be a bit bumpy.
With that being the case, I have decided that as long as we are above the 1.02 level, I am not willing to sell this pair. In fact, I have no interest in doing it into we get at least to the 1.0370 area. Going forward, I think that this could be the beginning of something significant, although this pair will not be for the weak-willed.