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Strong crude. Strong commodities. Dollar melting like a popsicle on a sunny day. Yet the aussie can’t get buyers to rally the pair over 1.0200 in a significant way. Why not?

3-2-2011 2-57-42 PM.jpg

The daily AUD/USD with my GRaB MT4 plug-in and 34EMA Wave

Fundamentally speaking, there has not yet been any conclusive data that say that the floods in Brisbane had only as temporary effect on the economy. I think traders want to see that the aussie dollar was not impacted longer-term. There’s also the sympathetic reaction to the PM Key say that a cut in the kiwi’s interest rate would be welcome.

The price action points to a fight coming. All these concerns seem to be playing into the seller’s hands at the 1.0200 level where prices exhaust. Keep in mind however despite the ceiling, the daily AUD/USD has managed higher lows so there’s a decision coming at 1.0200 with the bulls still maintaining all the the uptrend that stemmed from the May and June 2010 lows.

The GRaB candles on the daily have been predominantly green indicating bullish sentiment and momentum but the handful of blue (neutral) candles indicate the hesitation near the range highs. The flat – but lumpy – 34EMA Wave reflects a market in a sideways market trend and in my opinion the fades from 1.0200 are characteristic of distribution.

Tonight’s potential high impact economic data in the AUD/USD (Building Approvals and Trade Balance) could be the beginning of the fight as prices hover just below 1.0200 – today’s high so far is 1.0182.

For traders who want to get long based upon the current strength, look to short-term time frames like the 15 and 30-minute charts which are both in uptrend and can be set up for swing buys.

– Raghee aka Queen Cleopiptra

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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.