Bookmark | Site Map | RSS Feed

By FXCompass — Wednesday, 07 April 2010

The Australian dollar’s seems unstoppable these weeks. Its uptrend is well in shape and hasn’t shown much signs of weakness ever since it started in early February. But things get interesting now that it approaches a key resistance region near .9320.

Not unlike the Canadian dollar, the aussie’s strength is largely attributed to a rebound in oil and commodity prices. Add in two RBA rate hikes in less than five months and promising economical data and we have a legitimate case for big gains.

But in the forex market, technical analysis cannot be understated. Let us take a look at a few AUD/USD charts.

The daily chart reveals a key resistance level at 0.9320. In three occasions in the last quarter of 2009 and early 2010, the price simply could not stay above .9300 for more than a day.

Looking at the weekly chart, we see that .9300 has played a very important role in the past few years.

Based on these two charts, it would be very difficult to predict what the pair will do in the long term. A breakout above 0.9320 could be short lived and reverse near .9400 like it did multiple times in the past. On the other hand, a significant retracement cannot be expected given the fundamental outlook.

When faced with such incertitude, the best thing to do is probably to wait and let the price develop until a clearer picture appears.

However, the .9300-.9400 range could present good trading opportunities for short term traders as it is likely to act as a pivot region until a new direction is found.