Australian Dollar Breaks Out, Hammer Points to Further Gains

The Australian Dollar has been on a tear ahead of the Reserve Bank of Australia interest rate decision. The extra long wick on recent the hammer formation foreshadowed Friday’s strong breakout. This morning, the AUDUSD blew past resistance at 0.9050 and as long as it closes above that level, expect a possible test of the multi decade high of 0.9400.

                                     [B]Currency [/B]             [B]Candlestick Formation[/B]             [B]Bias [/B]                          [B]About the   Candlestick Warrior:[/B]    I am a big believer of [B]Paralysis by   Analysis.[/B]  I   feel that most chartists use too many technical indicators or always try to   find the perfect combination of indicators that validates their trade idea.   That’s why I like to keep things simple, basing my trading decisions almost   exclusively on Japanese candlestick formations.  Here’s where I think currencies are headed   this week. Let me know what you think my analysis on the [Candlestick forum](http://www.learncurrencytrading.com/fxforum/showthread.php?t=13956)                                EUR/USD             Doji and Triple Top              ST Bearish                                            GBP/USD             Spinning Tops             Bearish                                            USD/JPY             Three Inside Up Formation             ST Bullish                                            AUD/USD             Hammer and Breakout             Bullish                                            NZD/USD             Hammer on Weekly Charts             Bullish                                            USD/CAD             Three Outside Down             Bearish                             

[U][B]EUR/USD Daily Chart[/B][/U]
[B]Trading Strategy[/B]

  1.   Short EUR/USD now (1.4815) with a stop around 1.4945.  Lock in profits on half of the at 1.4685, move stop on rest to breakeven, targeting 3 times risk at 1.4425
    
  2.   Buy EUR/USD on a break of 1.4933 with a stop below 1.4800.  Lock in profits on half of the position at 1.5065, move stop on rest to breakeven, targeting 3 times risk at 1.5332.
    

[B]Arguments for Short Term Weakness[/B]

  1.   Triple Top on Daily Charts
    
  2.   Long Legged Doji on Daily Charts
    
  3.   Price Below First Standard Deviation Bollinger Band on Daily Charts
    

[B]Long Term Strength[/B]

  1.   Hammer on Weekly Charts
    
  2.   MACD Still in Positive Territory
    
  3.   Price Opens Above First Standard Deviation Bollinger Band on Weekly Charts
    

[B] EUR/USD Daily Chart[/B]


[U][B]GBP/USD Daily Chart[/B][/U]
[B]GBP/USD Trading Strategy[/B]

  1.   Stay Short (now 1.9760) with a stop at 1.9925.  Lock in profits on half of the position at 1.9615, move stop on rest to breakeven, targeting 1.9350.
    
  2.   Buy after a daily close above 1.9925 with a stop below 1.9800 stop.  Lock in profits on half of the position at 2.00, move stop on rest to breakeven, targeting 2.02.
    

[B]Arguments for Fading Strength[/B]

  1.   Spinning Tops
    
  2.   Long Candle on Friday, Closed at Day’s Low
    
  3.   Shooting Star on Weekly Charts
    

[B]Arguments for a Rebound[/B]

  1.   Downtrend line broken 
    


[U][B]USD/JPY Weekly Chart[/B][/U]

  1.   Long USDJPY (now 106.68) with a stop at 105.50 (1/21, 1/22 and 1/31 low).   Lock in profits on half of the position at 107.85, move stop on rest to breakeven, targeting 109.90 (50-SMA)
    
  2.   Short (now 106.68) with a stop at 108.00.  Lock in profits on half of the position at 105.50, move stop on rest to breakeven, targeting 101.70.
    

[B]Arguments for a Bottom[/B]

  1.   Long Legged Doji on Weekly Chart
    
  2.   Triangle Formation on Weekly Chart
    
  3.   Three Inside Up Formation on Daily Chart
    
  4.   MACD in Positive Territory, Hammer on Friday (Daily Chart)
    

[B]Arguments for Further Weakness[/B]

  1.   Prior Low of 107.22 Already Breached
    
  2.   Inverse Hammer on Daily Charts as Well, Bottom Also Broken 
    


[U][B]AUD/USD Daily Chart[/B][/U]
[B]AUD/USD Trading Strategy[/B]

  1.   Stay long (now at 0.9088) with a stop at 0.9040.  Sell half of the position at 0.9140, move stop on rest to breakeven, targeting 0.9235
    
  2.   Short on a close below 0.9040 with a stop at 0.9088.  Lock in profits on half of the position at 0.8992, move stop on rest to breakeven, targeting 0.8890
    

[B]Arguments for Further Gains[/B]

  1.   Breakout of Former Resistance at 0.9050
    
  2.   Recent Hammer on Daily and Weekly Charts
    
  3.   10 and 20-day SMA Crossing the 100-day SMA
    
  4.   Bullish Marubozu like formation on Daily and Weekly Chart
    


[U][B]NZD/USD Weekly Chart[/B][/U]
[B]NZD/USD Trading Strategy[/B]

  1.   Stay long (now at 0.7935) with a stop at 0.7880.  Sell half of the position at 0.7990, move stop on rest to breakeven, targeting 0.8100
    
  2.   Short on a close below 0.7850 with a stop at 0.7900.  Lock in profits on half of the position at 0.7800, move stop on rest to breakeven, targeting 0.7700.
    

[B]Arguments for Further Gains[/B]

  1.   Breakout of 4 month trading range 
    
  2.   Hammer on Weekly Charts 
    
  3.   Three White Soldiers on Daily Chart
    


[U][B]USD/CAD Weekly Chart[/B][/U]
[B]USD/CAD Trading Strategy[/B]

  1.   Short now (0.9942) with a stop at 1.0120.  Buy back half of the position at 0.9764, move stop on rest to breakeven target 0.9075 (11/07 low)
    
  2.   Long on a close above 1.0120 with a stop at 1.0000.  Sell half of the position at 1.0240, move stop on rest to breakeven, targeting 1.0500
    

[B]Arguments for Further Weakness[/B]

  1.   Three Outside Down on Weekly Chart
    
  2.   Identical Three Crows on Daily Chart 
    
  3.   Trendline Break
    

[B]Arguments for a Rebound[/B]

  1.   Triple Bottom on Daily Charts, Matching Lows