The Reserve Bank of Australia (RBA) raised the cash rate to 3.5% on Monday last week, as expected by analysts. A few hours before the actual announcement, I thought that if true, the annoucement should obviously make the currency pair a buy, right? Right, but not on the very minute the announcement was made. It dropped 175pips from 0.9089 to 0.8914, a case of the classic “sell on news.”

I’m confident that AUD/USD shouldn’t be shorted.

The Aussie Dollar, the currency with the highest interest rate amongst the majors, has been consistently climbing up since February of this year and it has not made any significant correction. Its consistent rate hike is I believe the main support of its ascent. It’s a no brainer, 3.5% against 0.25% of the ailing US Dollar? Buy AUD, Sell USD!

I let the market digest the news first and waited for a trade setup to surface itself, and it did.

After a couple of days I called a buy on the pair at 0.896 and 0.9.

On the hourly chart, I detected an AB=CD confirmed with RSI BAMM setup. This reversal pattern duo has never failed me before, making me more confident of my call to go long on AUD/USD.

AUD/USD has already gone up more than 200 pips from 0.8960 and I do not suggest buying immediately if you’re not in the trade yet. As always, be patient and wait for a pullback. There’s still a possibility of retesting 0.9. Anywhere near 0.9 is a buy.

Targets: 0.9325 / 0.94 / 0.95

Recommendation: Wait for pullback.

Updates on this trade will be posted on the FOREX Forum > AUDUSD.

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