AUD/USD

haha so far I seem to have been the only one in the bull camp the last few weeks and month(s)... seems to work, be a retail contrarian

OK so some objective analysis... here we can see that AU has been in a multi-year uptrend (RED TL) as denoted by the touch in 2008 during the crash and then a higher high.

Postulate #1: We know that prior to the 2008 crash it broke the first bearish TL to do a short covering rally which lasted up until the crash.
Postulate #2: The same thing happened in 2009 as the second bearish TL was broken (second red circle reading left to right).. here is where it gets interesting, read below.
Postulate #3? Now we are at a point where the blue TL bearish has been created again and is about to break meaning a short covering rally is in order.

Volume analysis tells us that peak volume came in at the low range of the consoldations followed by the blue TL breaking. This can be seen in 2009 and lately in 2011... which is about to precede a blue TL break.

Now conventional volume analysis might lead to you believe that there is major distribution going on as no higher highs have been made and there was very high volume in 2011, highest ever. While it has trailed off and still no higher highs... usually a bearish sign, however it might just mean that there was major bear consumption happening by a larger bull that took a long time because of sheer size of the upcoming bull run that is about to take place... the length of time it has consolidated on the monthly shows this, if the TL is broken successfully. In fact there were 2 peak volume periods during this consolodation and both happened at the bottom of their respective ranges during this consolodation phase. (Think of it as a sort of test of the low, which remained intact.. the one with the highest volume in 2011), low of around 0.9375...

What edges me towards the bull side for the short time period is 2 things.... one is the fact that there is usually some stop hunting before a trend change meaning a resistance gives, small or big.. secondly if we look at the CRB Commodity Index chart (attachment #2).. you can see that the charts are correlated except that AU has been outperforming the recent selloff in commodities over the past year and a half... Gold soldoff so did cotton coffee etc, but AU lows during that peak volume remained. CRB shows a series of lower lows while AU shows consolodation about to break on the bullish side. This means that commodities are way oversold or that AU is overvalued... Either way they should catch up to each other once the real move sets in.

As you can see that AU volume consumed bears while commodities including gold sold off and AU remained on top of its monthly chart range. This might be accumulation volume that will take it up to 1.25 and beyond perhaps before the next correction or trend change.

That is on the bull side.

Now either you are a market bear or market bull because I don't currently see how AUD will go off on its own with commodites diverging away from AUD USD exchange rate... that is to say that as AU goes so does commodites and vice versa.

Market bulls will say that the commodity super bull is not over... and this includes that gold's 12 year bull is not over.. if you believe that the current monetary policy is too loose and we will run into inflation problems sooner rather than later then you can safely say that commodities should make higher highs.

There are those that say commodity bubble has burst and USDx will rise... does that mean AUD USD follows commodities down until it creates a good base? The only way I see divergence happening is if RBA ACTS and doesn't talk.. like SNB or BOJ... if they do then it is up to the market to decide if they will test RBA's resolve or leave it.

Remember that interest rate differential of AUDUSD is still positive and it is attractive to large funds to sit when the commodities are to rise.

I believe that AUDUSD will break the blue TL... so short term I'm a bull and have been for a while now.

aud/usd about its monthly resistance level of 1.0459, looking strong like eur and gbp at the moment as eur had some good news regarding a few things including pmi, business expectations etc.

trading now aud is really trading risk on/off. When I get signal in aud, often diversify my position to indexes/commodities. I use simplistic method of strong vs weak risk on/off markets to choose best candidates for long/short. No need for more than three.

this relationship will end one day due to fundamental reasons so one should keep that in mind to minimise adjustment time to new conditions.

You are on the right track all along.

Look at CAD. I was hoping U/CAD will see and stay above parity by now. AUD and NZD have provided the same function as CAD as safe haven and risk currency. How can you beat it (CAD)? It remains strong in Risk-Off (safe haven) and Crude rally in Risk-On. I will stay away from YEN and it's losing the safe haven status due to the easing.

RBA is going to do something IF China is going down the drain.

So who is going to beat AUD and NZD? Only silly girls would do that.

This is the best post from you I have ever read. Excellent job Jag!

He can only write when no disruptions on this thread

Hahahaha

I agree us dollar weakness near term should give the aud some rise near term. Im on that usd/chf tilt right now with alot of short O-flow triggers to 8787...

lol thx i was waiting until it all cleared up so we had the normal ppl here to reap benefits of ppls analysis without being biased

i see the same thing however it may not just be short term weakness if commodities are to rise. Remem that fed is starting its first payments from qe infinity. Alot of retailers may be going long usd thinking its a bargain. Usually its the ooposite of what it seems. Crucial point anyway on the chart.

yeah what did they say again pledging to hold rates into 2015 or beyond with qe3 extending into jan-feb but with the option for them to run it till they see fit? very very bearish indeed

i guess bearish in terms of usdx pairs
but prob bullish for us equities. I been waiting for time where they move
in line. Its a sign that all is back to normal before the next
bubble. I guess home sales are the most important because that was the thing
that kept them going until it rises they will keep going.


Would be interesting to know how crb au and xau did during normal times.

gold adjusted dji

looks like a new equity bullish cycle is ready to form regardless of the dollar.. and new bubble should form does look like it generally pushes to 100 prefed level before the market recycles tho

Good Morning All, interesting article below, What Happens If The Dollar Hits US 1.20 http://www.smh.com.au/business/what-...125-2a1im.html

generally companies hedge against this stuff. I wouldnt suppose it will effect normal aussy life to much

The Aussie dollar too high?
Australia is too expensive and it isnt from a high A$
We import everything and sell rocks.. so theoretically it should be cheaper... however red tape, taxes and blatant rip offs are Australia's problems not the value of its currency.

lasty are u australian?

No, not Australian but living here for 30 years counts ..

in your opinion whats it like over there ? things to expensive?

Yes very expensive..
mates from overseas comment about the cost every year when they visit