AUD/USD

Main technical support after 0.9800 is 0.9537


The Australian Dollar still looks quite heavy across the board, and this had led the currency to extend losses against the US Dollar in the last hour, hitting a fresh 2-week low at 0.9954, strong area of support. The cross is 75 pips or 0.74% below its opening on Tuesday.

“Risk markets did well on Monday in anticipation of more moderate than feared Chinese CPI but now the Aussie finds itself struggling in what appears to be a classic case of buy the rumor, sell the news” commented Jamie Coleman, Edior at Forexlive.

On the downside, 0.9840 is likely to be the next reliable area of support should the Aussie not hold back the bearish tide. If the pair ever gets there, first USD should take out lows at 0.9950, level it stalled at in the past hour.

.9920..perhaps then .9865 afterwards? this is new to me I am currently holding a short looking to hit support

Divergence or not, it's a buy @ .9950 Trend line support.

Think we are going back up, across the board, with gold and silver selling off to fund the shift in asset classes. USD/CHF and UJ heading south. (Likely, do your own DD)

i dont see any buy signal yet, what i see is still a very strong bearish sign... but i might be wrong... now staying out of this game for a while....

Look at UJ. Wicks on the 4H. The carry trade is about to resume. The TIC data would have been a bit of a shock for market. The Dollar isn't looking so pretty after all, and UCHF is meeting resistance @ the 21 ema weekly chart, as it did last time.

It's a balance of probabilites call (as always) but it does look like this market is going back up.

"Rumors the ratings agency Moody's is considering a downgrade of Australia's largest mortgage insurer, a move that could knock down the ratings on $2.7 billion of investments, also favored the slide in the cross"

Divergences on the monthly will take a looooooong time to play out. And there will be a lot of buys in between. But dont discard the overall bearish interpretation of the divergence...

if there is a double top on the 5 minute chart? I am trying to learn the charts
thanks
Mike

I'm looking for .80 on the aussie in the long-run, by summer. But 1.04 first.

Looks pretty bullish to me, buy on dips for me.




Cheers

Don't you think is testing parity before another dive?

Do have no clue on direction and I do not care. All what I read is that on a longer time frame chart (4hrs +) the trend is up for now. Will watch price around the Fib 38.2 mark and then decide on that buy.

Cheers

will monitor PA for exit

moody's reviews for possible downgrade australian major banks' aa1 ratings

seems bearish at 4hrs time frame, i wonder if .9900 will hold... first tp at .9900

Is the blue shade a possible reverse? or your entry? something else?

I think is his TP level...and level for possible reverse.

despite its hovering just above resistance, it looks strong today. and crude oil seems to be getting ready to gain some dollars later. in that case, it's very likely that it'll rise a cent or more till tomorrow. but with this pair, who can be sure about anything...

Thanks for the welcome! As to whether the AU is in a bubble...one thing that concerns me is the possibility that the AUD may be priced for a very bullish economy which the Australian economy is not. What I mean is this - it is common to come across media articles from respected economic commentators saying things like home financing increases in December will lead to rate increases. However when you go look at the actual data they cite it does not actually support the very bullish conclusions they cite. For example with the home financing increases in December, most of the increase is due to an increase in refinancing which has been increasing over the last few months. In addition loans for new homes fell off a (seasonally adjusted) cliff in December. Financing for establishing homes did increase by over 3% so it wasn't uniformly negative. However without refinancing, the headline figure of 2.3% growth would actually be only 1% growth. The current "pattern" for Australia housing seems to be large drops in sales volumes since mid-year while still retaining high prices.

Also, according to official government statistics, house prices have started to fall. The first revision to the September 2010 quarter results marked it down from 0.1% growth to a -0.3% decline. This is on the heels of large negative revisions in the July and March quarters too (though without going into net falls in the final results). It doesn't support house prices falling off a cliff (though I am personally of the opinion Australia's housing is in a bubble) but it definitely does not support the conclusion that house price strength will cause interest rate pressure.

With inflation - while there have been significant price rises in things like fresh food and utilities, the thing is core inflation is only 2.2% - the lowest since 1999. There is a bad retail environment, massive discounting and even price wars on basic groceries like milk and bread. Because of bad sales, retailers are sacrificing margins to get sales. Now these things are not evidence that Australia's economy will collapse at any moment. However it would be fair to say that the main factors which may drive interest rate rises are mixed at best and far from certain. To be honest I'd expect an interest rate cut before a rise though I think I am the only person I have ever seen/heard/read who thinks that so it may be best not to trust me on that.

The point for the currency is, I am sure it is at the high levels it is at, at least partly because of these extremely bullish predictions. If it turns out the outlook is not quite as bullish as everyone expects, the Australian dollar could be in trouble. I'm new to this, but it makes sense to me if you drive expectations too high and you fail to meet those expectations, even if you're not really that bad (I'm not saying the economy is falling off a cliff here!), the disappointment and shock could lead to harsh punishment. What I would be interested in is the market's reaction to a very possible negative GDP growth for the 3rd quarter. It was barely positive and that was on the back of expected very good agricultural harvests which have been wiped out by floods in NSW, Vic and Qld. Though no-one ever seems to pay attention to revisions, so maybe no one will notice. Assuming people actually notice, will the market psychology be such that they shrug it off as an aberration (as they would have during the Brisbane floods period) or will they panic and start selling?

Of course if the Australian dollar falls the domestic banks could be in trouble due to their reliance on overseas funding (I'm surprised some hedge fund somewhere hasn't started preparing attacks based on this - though they may be waiting for the October expiry of the government guarantee).

I guess the reason why I think about these things is I'm not really knowledgeable about the technical aspects of trading - I'm trying to learn, but it is confusing. However I'm not really knowledgeable about economics either. And my thoughts seems to be the inverse of what practically all the experts seem to think, so maybe I'm slitting my throat both ways Still one learns from one's losses. Haha. Hopefully it won't come to that.

Thanks for the tips. I didn't realise you had to choose sessions! I think I might end up a longer term trader if only because all my short term bets in anything seem to go awry. Of course my longer term bets may not end up much better, but hey, here's hoping. I will remember your advice about keeping it simple. It seems good!