The AUD/USD pair rose during the session on Monday, breaking through shooting stars that we have formed over the last two weeks. However, the 1.0350 level looks like it's offered enough resistance to keep the buyers at bay. Nonetheless, this market does have a significant barrier at the 1.04 level, and as a result I'm very hesitant to start buying here.
The overall market has been consolidating between the 1.02 level on the bottom, and the 1.06 level on the top. The 1.04 level is a bit of a "middle point", and as a result there will be some bit of market memory there as it is what we would consider "fair value." Looking forward though, I think that the best way to get above the 1.04 level will be to pull back and collect more traders. This is what I expect to see this market do, and as a result I would be looking for opportunities to buy this market on the shorter-term charts that show signs of support. Eventually, the market should breakout and above the 1.04 handle, but that could be very rough ride indeed.
Not for the faint of heart
The move higher in this pair will undoubtedly be choppy, and the gold markets certainly won't be helping. The gold markets look like you're trying to get a little bit of a bullish run going, but there is enough downward pressure that it won't be an advantage to the Australian dollar like it typically could be. However, the overall "risk on" sentiment did come back to the markets on Monday, so I fully expect to see the Australian dollar mimic what the S&P 500 does.
As for selling is concerned, I don't really see an opportunity to do so as the recent action has formed a bit of a "rounded bottom." With that being the case, it does show that there is significant support below, and besides, the last time we broke below the 1.02 handle - we formed a wicked hammer back in February, which of course push this market all the way back up towards the 1.06 handle.
