You may be asking yourself why I've been shorting AUD/USD near the low. Many people wrongly assume that if a market has gone done "to much" and for a long period of time, the market must reverse. Well that's not reason enough for you to assume the current down move is over, we have to look at facts rather than personal opinions. Trading in the direction of the trend is much more easier than fighting the trend. Although I already posted some fundamentals reasons behind the current aussie weakness, I would like to say them again, and this time we're going to look at technicals as well.
Four fundamental reason behind the AUD/USD bearish trend:
  1. Few months ago RBA cut interest rate at historic low.
  2. RBA has decided to kept the door open for another round of interest rate cut if the economy is not showing signs of recovery.
  3. IMF suggested that the aussie dollar is 10% overvalued.
  4. With US Fed likely to taper in the next few months AUD/USD is at risk.

Now that we know the fundamentals lets look at the technicals as well (see Figure 1). First thing that jumps in our eyes is the big bearish trend, next look how sloped is this move, this can only suggest that strong sellers are in control of the market right now. Previous big support level was at 0.9300 look how now is acting as resistance level, first we have sold hard into this level and manage to close below and since than market made a pause but now it seems it's ready to challenge the last swing low and let's hope it can break below that level.
  • Figure 1. AUD/USD Daily chart. 
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