Chip The Chartist - 2013-02-03 538x218

Chip The Chartist Weekly Report – 03-Feb-13

AUDUSD is wound up like a coiled spring and ready to go. Volatility, measured here using the Average True Range with a setting of 14 (ATR(14)) is down from 420 to 130 PIPs a week.

The AUD Interest rate announcement is due on Tuesday and this will surely affect direction.

Chip The Chartist - 2013-02-03 - AUDUSD Weekly Chart

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AUD is in favour recently for two fundamental reasons. The Stock market is interesting as China picks up and the current Interest rate of 3.00% means it is favourable to the “carry trade”, particularly against the Japanese Yen.

It is expected that the AUD Interest rate will be kept at 3.00% (on Tuesday) which will retain the favour of those involved in the “carry trade” but may weigh on the Stock market a little. If, however, the rate is cut, there could be a sharp exit from the “carry trade” and the room available to the downside could be filled rather quickly.

Entry
The preferred trade here is to the downside and it would be preferable to have this fuelled by an Interest rate cut. An entry below this weeks low, around 10360, would be a prudent entry following such news.

Stop
Above this weeks high (around 10475).

Target
There may be some resistance around 10150 (the lows of Q3 2012). So, taking at least half profits here and moving Stop to breakeven would make sense.  After this expect further resistance at parity.

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DISCLAIMER & COPYRIGHT

This report is based on my analysis on my charting package. It may differ to yours as it can be affected by time, market movements, charting packages and broker prices. I accept no liability for loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on any information in this report or analysis.