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AUD/USD Monthly Analysis for December 2012

By:
James Hyerczyk
Updated: Aug 20, 2015, 23:00 UTC

Although the AUD/USD traded in a tight and narrow range, it did manage to close higher for the month. Demand for higher yielding assets underpinned the

Monthly AUD/USD Chart

Although the AUD/USD traded in a tight and narrow range, it did manage to close higher for the month. Demand for higher yielding assets underpinned the Aussie while talk of another interest rate cut by the Reserve Bank of Australia kept a lid on any substantial upside movement. 

Since the big story this month is expected to be the U.S.“fiscal cliff”, any move by the RBA is expected to take a backseat to the resolution of a major U.S. issue that could cripple the economy during the first quarter in 2013. If government can reach a timely compromise then demand for higher risk assets could increase, driving the Aussie sharply higher. A failure to reach a resolution could pressure the AUD/USD. 

The technical picture is leaning toward a resolution based on the positive close. Based on the 1.1080 to .9387 range, the market’s ability to hold a pivot price at 1.0233 is a positive sign that buyers are supporting the Aussie.

Monthly AUD/USD Chart
Monthly AUD/USD Chart

 Also during the month, an uptrending Gann angle is at 1.0467 and a downtrending Gann angle is at 1.0400. Last month’s close at 1.0426 has placed the market in a somewhat bullish position. A sustained move throughout the month over 1.0467 could attract buyers, leading to a possible rally to another downtrending Gann angle at 1.0740. 

The first sign of weakness will be a break under the pivot at 1.0233. This will likely mean that a compromise over the “fiscal cliff” has not been reached. This news could cause ripples in the financial markets that pressure higher-yielding assets like the Australian Dollar. Heavy selling pressure may even trigger a break to 1.0008. 

In summary, the narrow trading range has the AUD/USD set up for a volatile move. This is likely to coincide with a news event regarding theU.S.“fiscal cliff”. The key number to watch is 1.0233. This price will dictate the direction of the market. The upside potential this month is 1.0740. A possible downside target is 1.0008.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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