The AUD/USD pair fell during the course of the session on Friday, but found support just below the 0.94 level, an area which of course has been resistive in the past. Because of this, I fully anticipate that we will continue to see support in this area, and the fact that we formed a hammer for the session on Friday tells me that the market is trying to break out to the upside. You often will see this type of candle formation just below a massive resistance area when the buyers are starting to take control, as it shows a real wherewithal and determination to breakout.
I believe that the 0.95 level is the top of the resistance area, so it’s not going to be a market that you could buy right away. Quite frankly, I would like to buy this market lower if I get the opportunity, but right now it does not look like I’m going to get that. However, you have to keep in mind that we have been consolidating between the 0.92 level and the 0.95 level. With that being the case, a pullback still offers a buying opportunity as quite often the markets will grind sideways for a while after going higher like it has.
Gold markets got a little bit of a boost, and it could affect this one as well.
I believe that the gold markets got a little bit of a boost on Friday, and that could show that money will flow back into the Australian dollar is well. Over the longer term, the 2 markets are typically correlated, and as a result I am watching both of them simultaneously in order to do a trade in one or the other. The gold markets have to deal with the $1280 level though, which of course is resistance. Between there and $1300, there could be a lot of selling pressure so that could translate to this market not been able to quite breakout. Because of this, I will be looking to buy pullbacks on signs of support, as it is not necessarily going to be a bearish market until we get below the 0.92 handle. Ultimately, I do think that the Australian dollar goes to the parity level, but it might take a bit of effort.
