AUDUSD—Mucking about

On the weekly chart, AUDUSD is mucking about, with this past week’s high of .9328 lower than the prior week’s high of.9402. This is seven weeks of essentially sideways movement. Why is this interesting? For one thing, during the last seven weeks the demise of the USD has been a constant theme. For another, Australia is a strong commodity currency. It’s difficult to draw conclusions yet but this is something to tuck in the back of one’s mind as one examines price action on the shorter time frames.

The pair made a nice dip on Friday to .8947, a tad above the October low of .8916. Since I took the four-day weekend, I missed the long. In dipping, it broke below the daily uptrend line from March. This is a sign of weakness. It's important to remember, though, that a break on the lower liquidity Friday (US holiday weekend) is suspect. The pair has climbed back to its trend line, technically known as a pullback, but fallen away on the three-hour chart. Daily momentum is still good from my readings. However, price behavior is a bit squirrelly. Again, that could be from the lower liquidity of last week.

On the three-hour chart one can see that in the pullback the pair retraced .618 of the drop from last week’s high. OK, the plot thickens. Had I not been asleep when this happened, I might have sold. As I always say, some trades get away from you. One more sign of weakness, this time in a shorter time frame. If I want to short rallies, though, I’m going to have to drop down a bit further to the hourly or 15-minute chart. For now the one-hour chart shows the pair hesitating. On the three-hour chart, the most recently closed candle of just a few minutes ago shows a hammer, which may be bullish. Tonight is the RBA interest rate decision so a little mucking about will probably be the order for the day. Here is the three-hour chart:



© Dianne Fecteau, 2009