AUD/USD Technical Analysis October 31, 2011

The AUD/USD pair fell, and then rose again during the Friday session to form a hammer. The candle is at the top of the move up, so it is either supportive – and the rally has been strong, or it will be a “hanging man” if the bottom gives way. Either way, we think the tide has decidedly shifted in the favor of the Aussie for the time being. If we fall from the levels we see now, we think the 1.60 level will be the “floor” in this pair for a while. The breaking of the highs from Thursday will also be a signal to buy as well. We won’t sell until we break the low from Friday, and then only until 1.60 or so – we think the trend is too strong to risk a long-term sell at this point.