AUD/USD: Bullish Signs Continue To Form

As we mentioned in our weekly forex market commentary, the key area to watch for the aussie on the upside was the 1.0220/30 area and this held the upside of today’s wild ride of price action. In the process of the day’s modest gains, the Chikou span crossed the piercing line which is an additional bullish signal, along with the upward tenkan kijun cross 5 days ago and the sharp climbing tenkan line. Interestingly enough the price action for today touched the Senkou Span A of the Kumo before bouncing higher.

Although there are bullish signs continuing to form, the pair has yet to clear the Kumo which it will need to do to add more upside favor. For bears that think the 1.0230 area will hold, a short-term sell opportunity would be available at a rejection of the top of the Kumo which could happen today or tomorrow as they pair may chop around inside this Kumo before finding a direction, thus offering an upside rejection play.

Also using Ichimoku number theory, we are coming up on a 2-section move on the daily charts which is one of the three more common numbers where a pair will reverse so 2-3 more days for a possible move down. The alternative scenario would be a Kumo break, then using Senkou Span B as support in the following week for another upside attempt.

Global Market Commentary
A choppy session played out today with the FOMC meeting as Bernanke said they would extend their Operation Twist program but did not offer a more aggressive measure to boost growth (that is because CBs cannot boost real growth artificially). Needless to say, every instrument across the board chopped around with indexes going heavily south after the initial announcement, then gaining back the losses, only to end slightly negative.

The Dow closed down about 13pts or .1%, while Gold lost for a second day losing $7.80 to close at $1608 while the euro had modest gains to close just under 1.2700 with the pro-bailout party in Greece taking the mantle today along with Italy proposing the EZ’s rescue funds to start buying the debt of distressed European countries (Italy included of course).

Ironically, people seem to have forgotten all about Spain for the moment as it was so 5 days ago their banks are needing well over €150B to support their failing solvent banks.