Dislikedlooking for turning point from here.60 pips sl with 1.0201 first target.Ignored
Australia has good banking and their Asset bubble is no worse than the financial situation in Europe or the massive deficits by the U.S.. Everyone is chasing yield and why not, with expectations of further rate hikes and currently yielding 4.75%, won't you want to hold that vs a .025% yield from the Dollar? On top of that, crude continues to rally which is not helping the dollar as it is priced in dollars so it means it takes more dollars to buy the same amount of goods. As long as FEDs are unsure about when QE2 ends or whether they'll start another printing press, the market will avoid dollars and instead stay long something like AUDUSD NZDUSD and the *JPY as they are making good returns.
Lastly, Was looking at the chart above and thought i'd point out, isn't price outside of the uptrending channel? Doesn't that equate to a bullish sentiment or are you looking for price to fall back into the channel? I personally don't believe AUDUSD is range bound as it continues to set new highs.
http://i53.tinypic.com/1zxrrix.png
So it would be worth to see how the RBA reacts to the current uptrend and whether they increase rates, or cut rates. Rate cut would most likely start a sell off in the currency. Until then, no need to play contrarian when the market continues to reward to the long traders.
I would say this though .. one thing that scares me is that the commercial traders are MASSIVELY short (these guys are usually short when price is at extreme highs) and the non-commercials are RIDICULOUSLY long (usually this start to signal a trend reversal especially since there's 91k long vs 6k short!). So on the topic of shorting, I think the opportunity is there if you can be patient and hold for a longer period. Shorter term I think we could see a bit of upside towards 1.04 - 1.05 and then parity comes back into play especially if the FEDs decide it is rate hike time.
I know I said lastly above but I have one more to add. Notice that Copper and Gold which are highly correlated to the AUDUSD have been declining while AUDUSD continues up which shows that it is more a yield trade now than trading based on commodities correlation. So keep an eye on how central banks react to their benchmark rates.
ECB starts things up this week on Thursday.
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