AUD/USD rose again for the Friday session as the Non-Farm Payroll number came in much better than anticipated. This boosts the confidence of the markets, and “riskier assets” are suddenly much more attractive as the confidence will spread. The Aussie is a great commodity play, and as a result the markets bought it up everywhere.
The action for the session saw it break the 1.0750 barrier, and it looks set to continue higher in general. There can always be a pullback on a move like this, but all in all – it looks very strong. The commodity market in general have done well recently, and with the Federal Reserve keeping interest rates so low until at least the end of 2014, this should continue to favor the Aussie against the Dollar.
The breaking of the top of the Thursday shooting star is significant in and of it, and can be thought of as a buy signal on its own. The very fact that the failed rally was overcome sends a very bullish message to the markets. Also, the fear of a Chinese hard landing seems to have abated, and the Aussie gets bought as a result.
The 1.04 level continues to be the “line in the sand” for us, and until we get below it, we can only buy the AUD/USD pair. The area is far below us, so now the real strategy is to buy dips in this market as it ebbs and flows to a potential target of 1.12 or so. The pullback would be a healthy one, and we would be willing to get involved on any signs of support below here, and above the 1.04 level. The pullback would also give many other traders the opportunity to get involved in what is very obviously a bull market.
However, the 1.08-ish level is resistive as well, and as a result we think this market could struggle up to it. If that area gives way – 1.10 is next. Looking forward, we want to own the Aussie, and aren’t interested in selling it.
Written by FX Empire