Traders often ask me, “What is the daily trend in the March Australian Dollar?” Using my swing chart or main trend indicator I have to conclude that the main trend is up. My analysis suggests that the main trend turned up when the currency crossed 1.0193 on November 30 on its way to the last swing top at 1.0268 on December 8. The subsequent break to and the formation of a new higher bottom at .9761 is further confirmation that the main trend is up and likely to move higher once the last swing top is taken out.
Gann angle analysis suggests the market is trading inside of a triangle chart pattern with support being provided by an uptrending Gann angle from the main bottom at .9233 at .9803. Resistance is the downtrending Gann angle from the 1.0569 top at 1.0169. Following these angles into the future, one can see that an apex has been formed where the angles cross at .9986 on or about January 18 or 19. It is possible the market will ping-pong inside of this triangular formation until then. However, during the time until then volatility will be building inside of the triangle to produce a tremendous breakout.
Finally, horizontal support and resistance suggest the single currency is trading in between a pair of retracement zones. Based on the main range of .9233 to 1.0569, the first retracement zone is .9901 to .9744. Although this zone was penetrated in late November on the move to .9548, the lower boundary was quickly regained and the market was able to hold a retest at .9761 on December 15. Another resistance zone has been formed inside of the 1.0569 to .9548 range. This 50 to 61.8 percent retracement zone is bounded by 1.0059 and 1.0179. The upper end of this zone was broken when the market rallied to 1.0268 on December 8, but the market fell quickly back below it. Currently, it is straddling the 50 percent price at 1.0059.
In summary, the March Australian Dollar is in an uptrend. The Gann angles are indicating the market is trading inside of a triangle chart pattern which is a non-trending pattern. This, however, suggests impending volatility. Finally, the single currency is trading on the bullish side of a major retracement zone which is giving it an upward bias. If trader demand for higher risk assets, the Australian Dollar may receive the boost it needs to continue its rally.
