The AUD/USD pair fell most of the session on Wednesday to test the area of the 1.04 handle. This area is considered to be very supportive, and as such we fell that a buying opportunity may be presenting itself.
The 1.04 level is the area that the recent ascending triangle broke out over, and hasn't been retested until just now. This should in theory attract more buyers who feel they have missed the rally. The 38.2% Fibonacci level is right there as well, and this gives us another reason to be bullish of this pair at these levels.
The commodity trade may have been a bit oversold recently, and as that is the case - the Aussie will have been as well. We still think that the printing by central banks around the world will drive demand for the currencies that aren't being printed, such as the Aussie dollar. The commodity markets should get a bid as well, as the wealthy move into things that will help maintain their wealth in the current environment.
The Chinese are of course the outlier for the Aussies, as their economy will also drive Australia's economy. The Aussie will be highly sensitive to what goes on in the mainland, so headlines out of Asia could move this currency as well. None the less, it has been very bullish over the last several months, and at this point in time we are not willing to go against the trend. The breaking down below 1.04 would of course give us pause, and we would consider selling on a daily close that is far below it. Unless that happens, we will continue to trade this pair with only one of two positions: flat, or long. The high side of the market to us is still 1.12, which was the measurement of the previously mentioned ascending triangle. Since the breakout hadn't been retested until now, we assume it to just be a pullback in the market at this point and are willing to buy at these levels going forward as the swap is positive as a bonus.
AUD/USD Forecast March 22, 2012, Technical Analysis
AUD/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3