The Aussie – Gold Connection & Potential Intraday Breakout

The AUD/USD has reached an intraday double-top, with prices now exhausting between 0.9288 and 0.9292. This caps what has been a strong two-day rally in the AUD/USD, with the Australian Dollar strengthening against the U.S. Dollar. The current levels represent an important pause in the market as the bulls decide whether there is enough buying momentum to challenge the 0.9300 level, or whether the bears take over and push the market lower, correcting a rally of over 140 pips that started on April 28.

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The Triangle pattern that has formed on the 30-minute chart will be an excellent barometer of sentiment as the trading week comes to a close. The Initial Trend market cycle reading of only three bars indicates very little current trend on this time frame, with prices trading within a narrow range. If the AUD/USD can rally through 0.9282 (R), know that the 0.9292 high, as well as selling pressure at the 0.9300 “big figure” level, will be significant obstacles for follow-through higher. Should the AUD/USD correct lower, look for weakness through 0.9265 (S) as price break the Triangle’s uptrend line support.

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If the current direction in Gold (above) in any indication where the AUD/USD – known as a “commodity currency” for its correlation to Gold and the commodities sector in general – is heading next, there is likely some weakness and sideways volatility on the horizon: Gold has broken lower through its own Triangle uptrend line support and, more importantly, been rejected at the downtrend line at 1,169 (R). If resistance holds, Gold prices could follow-through lower to the Forecast area between 1,158 and 1,151; however the current distribution cycle – indicated by the four-bar Initial Trend reading – points to exhaustion (and near-term support) at 1,162 which could lead to a push higher and therefore help the AUD/USD break the Triangle resistance.

Charts courtesy of Autochartist

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  • OttoHolterman

    Hello
    Thanks for so much informative and helpful advise.
    I am currently trading with Interactive brokers. Was investigating other charting systems such as eSignal. I see you own a EZ2trade. But you present info here using autochartist.
    What are the pros/cons of each? What do you recommend? Or is the stuff supplied for free from IB good enough?
    Cheers

  • OttoHolterman

    Hello
    Thanks for so much informative and helpful advise.
    I am currently trading with Interactive brokers. Was investigating other charting systems such as eSignal. I see you own a EZ2trade. But you present info here using autochartist.
    What are the pros/cons of each? What do you recommend? Or is the stuff supplied for free from IB good enough?
    Cheers