The AUD/USD pair fell during the first part of the session on Monday, but as you can see clear the 1.04 level on the bounce as we await the monetary policy statement from the Reserve Bank of Australia. Because of this, it appears that the market is expecting good news, or at least no bad news. The 1.04 level has been an area that I've mentioned previously, as I see it is the "happy medium" of the market right now as we have been consolidating between the 1.02 level and the 1.06 level for roughly 18 months.
The fact that we have broken above that level and it is now acting as support tells me that we are eventually going to hit the 1.06 level. That is an area where we've seen a lot of resistance, but I feel that it's only a matter time before that level gets broken. With that being said, measuring the rectangle that we have been involved in suggests that this market is going to the 1.10 handle by the end of the move. It doesn't mean that the move has to happen right away, rather that we will eventually target that level. For that matter, it could take two years to get there.
1.04 should be supportive
Even with the central bank announcement early this morning, the 1.04 level should bring in support, not only because of the way he behaved the Monday, but the fact that there is a massive cluster from the middle March just below that handle. This should provide plenty of support for the market as we continue to grind higher. There will of course be a challenge of the 1.05 level, but I think it's only a matter time before that level gets broken and we continue much higher.
This pair could be very choppy over the next couple of weeks, and with Friday being nonfarm payroll Friday, there's a real chance that this market could be very choppy over the next couple of sessions as well. With that being said though, I do have an upward bias in this market.
