Aussie Bulls Taking Cues from RBA

The Australian Dollar closed on its weekly high while closing in a position to test a major 50% price at .7928. The next RBA meeting is June 2. It will be interesting to see what theRBA has in mind at that time especially if the Aussie is trading at that price at that time. It could turn into a classic battlebetween technicians and RBA watchers.

The Australian Dollar closed on its weekly high while closing in a position to test a major 50% price at .7928. News that the Reserve Bank of Australia had decided to refrain from cutting its benchmark interest rate fueled the start of this week’s rally while bullish investors remained optimistic that an economic recovery in China would lead to greater demand for Australian exports.

Clearly the action by the RBA has been setting the tone in this pair. Going back to the bottom on October 27, 2008 when the RBA was forced to prop up the sick Australian Dollar, aggressive action by the central bank has had a significant influence on the direction of this pair. 

The secondary bottom on March 3, 2009 was created when the RBA refrained from cutting interest rates. This week a similar scenario was created. Since the RBA has set the tone and direction of this pair, it is suggested that traders should continue to trade from the long side and use the charts to time the buys as long as the RBA is providing the reason to be long.

The next objective is the retracement zone at .7928 to .8382. The next RBA meeting is June 2. It will be interesting to see what the RBA has in mind at that time especially if the Aussie in inside of that retracement zone at that time. It could turn into a classic battle between technicians and RBA watchers.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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