Epic dollar squeeze erases AUD/USD losses

Epic dollar squeeze erases AUD/USD losses

From forexlive.com

There it is. AUD/USD returned to 0.7840 after falling as low as 0.7625 a few hours ago in a post-RBA selloff. It would be nice to credit the strength of the Australian dollar but it’s really a dollar driven move. This is a pure squeeze, in my opinion. The five most-popular positions in markets are: 1. Long USD 2. Short oil 3. Long gold 4. Short euro 5. Long bonds All of them are taking a pounding today and the market is puking. Short squeezes can be a nasty piece of business. There is no great rule of trading a squeeze. It’s hard to tell when it will end but with the euro flirting with 1.1500; Greg notes a ... (full story)

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Feb 3, 2015 2:34pm

Quoting TheTopBloke

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Really? You don't see this as a buying opportunity? Do I really want my money in USD? What's it earning? Wait, I can transfer money offshore, and earn what in AUD? Hmm...

Just something to consider. If this is the bottom, and it very well may be the bottom for 2015, then it is clearly cyclical, as this happen the previous year.

As for me, my crystal ball's broken, so I don't know.

Ignored

I'm starting to think its the 2015 low, at least for a while(as in months). I'm just wait for a few more days for confirmation the downtrend is over. As you mention, same thing happened last year about the same time.

PA is King

Feb 3, 2015 6:21pm

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Quoting Deano9999

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I don't think so. The COT was screaming for this kind of adjustment and re-balance of the shorts in many pairs but especially EUR, AUD & NZD. That said I'm not yet getting any exhaustion signal from the squeeze, but probably will later today. In the meantime its off to the golf course.

Ignored

Feel free to think and say whatever you would like...it's an open forum. First things first, I didnt say it WAS the low of the year, just that it could be a possibility. I'm still bearish overall on Aussie but cautious of a possible reversal. It all depends on price action .

I have no idea what the NFP on Friday will be, I don't have a crystal ball...I just have price action. Right now we had a 225 pip bullish daily candle on Aussie. And it currently looks like we are forming an inverted head and shoulders pattern on the 1hr and/or 4hr chart. Will be interesting to see what happens in the next few days. That being said, if we don't get back below .7700 and ultimately .7600 this week or next, then I could be inclined to start thinking about longing Aussie again.

Happy trading!

PA is King

Feb 3, 2015 9:13pm

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Last thing I saw was RBA may cut rates again, but not until August. So that would support my idea of a possible rally in Aussie in the next few month. Of course we'll know more after NFP on Friday. But for now I don't see any selling in Aussie, it's being kept up near .7800. Only a move below .7700 would lead me to believe the selling has begun again. And then I would like to see it continue below .7600 for trend continuation.

Cheers!

michaelpelly

Feb 4, 2015 1:02am

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Quoting dghent

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Just trade with them. Don't try to trade against them. If they want to push a currency around just follow them.

Ignored

I was sarcastic, sir :-), just mocking one of the frequent posters here.

I'm trading only GBP/USD with leverage. Under 1.58xx I only buy the dips - it has proven right strategy for the last 3 yrs.

I leave the blind buying of US dollars to other market participants :-).

ZebraSquirl

Feb 3, 2015 2:36pm

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Quoting keymoney

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quick question, what's causing the dollar to lose against most of it's pairs?

Ignored

I think it's more like a dollar long squeeze ... . End of month/beginning of next ... . Long dollar positions locking in gains and exiting positions. Fewer and fewer dollar buyers until the scales tip ... et voila! I imagine there will be a resumption of dollar buying (i.e., shorting AUD/USD, NZD/USD, EUR/USD) once the market shakes out and at appropriate levels for each of those pairs, sooo .... don't get too comfortable with the notion that there might be bottoms here. Unlikely, in my opinion ... .

ZebraSquirl

Feb 3, 2015 2:38pm

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Quoting ZebraSquirl

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I think it's more like a dollar long squeeze ... . End of month/beginning of next ... . Long dollar positions locking in gains and exiting positions. Fewer and fewer dollar buyers until the scales tip ... et voila! I imagine there will be a resumption of dollar buying (i.e., shorting AUD/USD, NZD/USD, EUR/USD) once the market shakes out and at appropriate levels for each of those pairs, sooo .... don't get too comfortable with the notion that there might be bottoms here. Unlikely, in my opinion ... .

Ignored

Then again, you never know ... . I just let the charts tell me what to do ... .

lumesh

Feb 3, 2015 2:39pm

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yeah, crazy moves in NZD and AUD, also in EUR and GBP.

I guess strong oil price climb leaded the unwinding of commodity currency positions, after all they were all selling off as if there's no tomorrow. GDT prices jump and rising copper did a good job to fuel the rally further.

But an almost 100 pip rally in NZD in less than 10 minutes (without any news) is something you dont see every day...or week...or a year

Could this be the bottom for the commodities decline ? If so, then commodity currency's have a lot to make up for...especially when the U.S. data keeps missing estimates.

Let's see what the employment brings in NZD

Deano9999

Feb 3, 2015 3:25pm

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Quoting keymoney

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quick question, what's causing the dollar to lose against most of it's pairs?

Ignored

Check the oil price. This is driving USD's money back into the Dow, S&P and commodities, so its an overall risk on day. It happens, so if you don't want to trade the counter move then wait for the main trends to resume - don't sweat it.

Finally got stopped out of my short AUD from 81.08 for 320 pips but missed the rest on the squeeze - thats life

Deano9999

Feb 3, 2015 3:30pm

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Quoting PA is King

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I'm starting to think its the 2015 low, at least for a while(as in months). I'm just wait for a few more days for confirmation the downtrend is over. As you mention, same thing happened last year about the same time.

Ignored

I don't think so. The COT was screaming for this kind of adjustment and re-balance of the shorts in many pairs but especially EUR, AUD & NZD. That said I'm not yet getting any exhaustion signal from the squeeze, but probably will later today. In the meantime its off to the golf course.

lumesh

Feb 3, 2015 3:48pm

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Quoting Deano9999

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I don't think so. The COT was screaming for this kind of adjustment and re-balance of the shorts in many pairs but especially EUR, AUD & NZD. That said I'm not yet getting any exhaustion signal from the squeeze, but probably will later today. In the meantime its off to the golf course.

Ignored

how do you figure ?

i don't see any extremes in cot report...perhaps in gbp, if at all.

Aud's positions are pretty much where they have been for quite some time now with no extreme shorts. What's there to rebalance ?

I agree on the oil price and overall commodity retrace.

well, we got bad unemployment rate, so nzd might start to underperform AUD with a rate cut on the horizon

lumesh

Feb 3, 2015 3:49pm

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Quoting merquise

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What retail traders? They only account for 4% of the market, lol They won't make any money from retailers...large banks are fighting other large banks and institutions. They are getting their other side..who do you thinks takes the short/long side when some bank enters the market. Retailers?? lol, no..not enough money with retail traders for that.

Ignored

(Y)

Deano9999

Feb 3, 2015 8:54pm

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Quoting PA is King

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Feel free to think and say whatever you would like...it's an open forum. First things first, I didnt say it WAS the low of the year, just that it could be a possibility. I'm still bearish overall on Aussie but cautious of a possible reversal. It all depends on price action .

Ignored

Agree entirely and I think we're on the same page. Simply saying that the RBA will cut rates again to send the AUD below 0.7500 (just don't know when) as imho commodity prices will continue to fall. The shuttering of 94 oil wells in the US is nowhere enough to re-balance the market, most of the US shale production will need to stop (The Saudis plan btw) before the oil price can sustainably rise so this spike is likely a flash in the pan.

No comment on the NFP - I don't trade the news only the aftermath so hopefully it generates lot of volatility.

Thor33

Feb 3, 2015 12:49pm

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Quoting keymoney

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quick question, what's causing the dollar to lose against most of it's pairs?

Ignored

Cause is currency war in top of all manipulator is US dollar
but this is short i am long sell in aud usd 74 .

this price is bottom of 2015

wildbill2u

Feb 3, 2015 1:24pm

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Great opportunities to replicate the profits of yesterday in AUDUSD and NZD/USD when the short squeeze ends.

You know these antipodean governments don't want their currencies to rise and they will revert to the reaction of their rate cuts.

My take is that the large banks are behind this short squeeze and will let these markets reverse when they've taken out the retail traders.

dghent

Feb 4, 2015 12:41am

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Quoting michaelpelly

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Traderathome probably has the answer "Robber Bank MMs" :-).

Ignored

Just trade with them. Don't try to trade against them. If they want to push a currency around just follow them.

dghent

Feb 4, 2015 1:28am

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LOL, Michael. I only trade the a/u as I live here and try to understand what moves it. I also buy the dips and sell the spikes. I did get caught overnight as I went long in the .7650-60 area and closed just under .7700 as I expected it to slow down at figure. Then the squeeze happened and it moved up another 150pts!! grrrrrrrrrrrrrr. I scale in and scale out.

TheTopBloke

Feb 3, 2015 1:39pm

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Quoting wildbill2u

Disliked

Great opportunities to replicate the profits of yesterday in AUDUSD and NZD/USD when the short squeeze ends.

You know these antipodean governments don't want their currencies to rise and they will revert to the reaction of their rate cuts.

My take is that the large banks are behind this short squeeze and will let these markets reverse when they've taken out the retail traders.

Ignored

Really? You don't see this as a buying opportunity? Do I really want my money in USD? What's it earning? Wait, I can transfer money offshore, and earn what in AUD? Hmm...

Just something to consider. If this is the bottom, and it very well may be the bottom for 2015, then it is clearly cyclical, as this happen the previous year.

As for me, my crystal ball's broken, so I don't know.

Feb 3, 2015 12:26pm

O o p s

Feb 4, 2015 12:07am

Quoting keymoney

Disliked

quick question, what's causing the dollar to lose against most of it's pairs?

Ignored

Traderathome probably has the answer "Robber Bank MMs" :-).

michaelpelly

Feb 4, 2015 2:16am

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Well, s... happens - price movement can't be modeled exactly all the time. This is where the risk/money management comes in - to keep the slack.

Feb 3, 2015 10:01pm

Tomorrow = reverse.

Feb 4, 2015 6:01pm

Quoting pbylina

Disliked

Tomorrow = reverse.

Ignored

How did I know?

roger44

Feb 3, 2015 12:28pm

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By NZ GDT Price Index too?!

roger44

Feb 4, 2015 3:06pm

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I sold NZD yesterday and I am going to buy NZD back today at about 0.736x level for NZD/USD.

frx_trader

Feb 4, 2015 12:27am

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vooooo oooo laaa tile market indeed.

upasna

Feb 3, 2015 10:12pm

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Quoting pbylina

Disliked

Tomorrow = reverse.

Ignored

Correct !!

dghent

Feb 3, 2015 12:36pm

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That's an amazing daily candle of the a/u!!!! so much for a rate cut to get the A$ down!!

Aimak

Feb 3, 2015 12:51pm

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This is the prelude to an epic NFP data

san99

Feb 3, 2015 2:17pm

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Well this is quite a move indeed but still, nothing next to the EPIC CHF moves of 15 January !!!!

thegmann

Feb 3, 2015 12:36pm

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holy shit....100 pip sl just got slammed rofl

Crucifix

Feb 3, 2015 12:36pm

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EBC Rise their rates from .05% to 100% and RBA also Rise their rates from 2.50% to 250% ..... price movement like that

merquise

Feb 3, 2015 3:47pm

Permalink

Quoting wildbill2u

Disliked

Great opportunities to replicate the profits of yesterday in AUDUSD and NZD/USD when the short squeeze ends.

You know these antipodean governments don't want their currencies to rise and they will revert to the reaction of their rate cuts.

My take is that the large banks are behind this short squeeze and will let these markets reverse when they've taken out the retail traders.

Ignored

What retail traders? They only account for 4% of the market, lol

They won't make any money from retailers...large banks are fighting other large banks and institutions. They are getting their other side..who do you thinks takes the short/long side when some bank enters the market. Retailers?? lol, no..not enough money with retail traders for that.