AUD/USD Has Some Room for Correction

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AUD/USD 4H Chart 9/6/2012 2:35AM EDT

Bearish in August; Correction to Start September: The AUD/USD has been bearish sine finding a top at 1.0612 to during the first week of August. As we almost wrap up the first week of September, it has found support at 1.0166. The show of demand for Australian dollar against the US dollar comes after some a somewhat dovish RBA that does not change the expectation of a rate cut later this year and poor Australian data (poor GDP and employment). This reflects a strong correction at hand against the August bear run.

The 4H chart also shows price action breaking above a recent declining trendline. The RSI is also about to crack 60, which would reflect a lost of August's bearish momentum.

Resistance Factors: There is some room until some key resistance factors. - 1.04 psychological handle. - 1.0410 pivot - 200-4H-SMA at 1.0425 - 61.8% retracement at 1.0442. - - A resistance/support pivot around 1.0450. Resistance on 7/19, then support on 8/1) - Declining trendline possibly near 1.0460 if price gets there in a few global sessions.

A break above this area 1.04-1.0460 will likely require a very real expectation of QE3. The NFP on Friday(9/7) can give a clue. Very poor data can actually help risk-on if the market interprets that as a sign of QE3 to come. Then next week's FOMC meeting will be highly anticipated, for its language, whether it indeed will follow the track of recently more urgent consideration of Fed stimulus. This bullish scenario, can expose the 1.0612 August-high, as well as the 1.0845-50 2012-high.

Otherwise, the weakness in the global economy, and China can weigh on the Aussie, as long as the RBA is still expected to cut rates later this year.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.