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Forex pairs in this Article » AUD/USD

The AUD/USD pair fell during the session on Tuesday, but as you can see bounced just above the 0.90 handle in order to form something along the lines of a hammer. This obviously suggests that there is support below, and that makes sense considering that the 0.90 handle is such a large round number. On top of that, this pair is highly leveraged to what's going on in Asia so we will have to watch numbers out of China as well as other countries in the region such as Japan and Indonesia.

That being said, the 0.90 level has been rather supportive several times. Granted, we just broke through it recently, but at this inpoint time I'm still looking at it as a potentially "false breakdown." With that being the case, I still believe that the 0.90 level can offer support. Granted, we are still within the consolidation area that I have been talking about for some time. I presently believe consolidation runs from the 0.90 and on the bottom, to the 0.93 handle on the top. In between there is a lot of noise, and quite frankly I think a lot of choppiness is just waiting to happen.

AUD/USD Daily Chart Aug 21

Remember that it's late August

This is the absolute worst time of year to trade the currency markets. This is because the liquidity is so low and most of the big money movers and shakers aren't even involved in the currency markets. That in and of itself almost guarantees a lot of choppiness and futile trading opportunities. Quite frankly, some of the worst trading I've ever done has been in late August as the market simply give a lot false signals.

On top of that, we have the Federal Reserve and its quantitative easing question at the moment. Will they taper, or will they not? That is what the entire Forex market seemed to be worried about at the moment, and as a result most of the pairs are currently grinding away in a very tiring fashion. With that being the case, I am paying attention to the 0.90 level as it could be a nice short-term signal to start buying in order to pick up a few hundred pips. However, I don't think the big move will come until a couple weeks have passed.

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