Technicals in the drivers seat. AUDJPY also helping.

The AUDUSD seems to be a story of favorable technicals that are squeezing the pair.

From a technical perspective (see chart above) , the pair has:

  1. Found support near the 50% retracement of the move up from the November 18 low to the November 25 high at the 0.71749 level (the low extended to 0.7170 in the Asian Pacific session).
  2. Extended above both the 200 hour moving average and the 100 day moving average near the 0.7200 area (100 day MA is at 0.71978). The 200 hour MA is currently at 0.7203
  3. Moved above the topside trend line on the hourly chart at 0.7211,
  4. Broken above the 100 hour moving average at the 0.7225 level, and finally
  5. Moved above the swing highs from Thursday and Friday at 0.7239.

The range for the day is now 79 pips. That does not sound all that impressive but it is above the 22 day average of 71 pips.

The next target is the Nov 20 swing high at 0.7250 (6 in chart) then the high at 0.7262 (7 in chart). The high price in trading last week peaked at 0.7282 (8 in chart).

The pair is stepping higher and so far there is little resistance of the trend.

Traders who are looking to take profit or set up a short, should do so against technical levels with stops if the levels are broken.

As the price goes higher it does become harder, but it is trending and trends can go farther than traders expect. So protect yourselves.

There also should be support levels below. For example, the 100 hour MA (blue MA line) should be a support level for traders to put up a fight. If the price cannot go back below this level, the buyers still remain in control.

Providing a helping hand to the bullish move is the AUDJPY which has also surged higher in trading today. Looking at the daily chart, that pair broke above the 100 day MA for the first time since end of June/early July on November 19 and has not been back below that key MA line. The pair is testing a resistance area between 89.15 (low from July) and 89.61 (50% of the move down from May high). If the AUDJPY is helping the AUDUSD on the upside, if the AUDJPY slows against a key resistance area, it may also be a brake for the AUDUSD. I would not be surprised to see some consolidation/corrective action as a result.