Matt Simpson, CFTe, MSTA
CityIndex
Large speculators were net long on AUD for the first time since May 2013 as the shorts continued to flee the market.
Keeping in mind the report (released each Friday) is 3 days delayed, so there is room for error if significant news impacts the charts between the Tuesday to the Friday. However the information is sufficient enough as a general confirmation tool of price advances/declines.
The chart below shows volume for FXA (Australian Currency Shares Basket) and towards the back of last week price was advancing on lower volume. If you then compare the volume to the AUDUSD chart you will also see the Charts produced a Shooting star reversal and a Hanging Man on the 2 last trading days of last week to watch of near-term weakness below 0.94, which may result in sideways trading or a retracement. However whilst the near-term may exhibit small signs of weakness the trend is clearly up and the medium-term analysis favours new high and to target 0.950 and 0.955.
Tomorrow the RBA release their minutes from their recent interest rate decision which may help reveal which way the RBA are leaning later this year in regards to interest rates. Chine data will also have an input to the likelihood of a bullish trend continuation, along with FED Chair Lady Yellen’s speech on Thursday.
- Near-term suggests sideways trading/retracement below 0.940-42
- Medium-term is bullish and to target 0.945, 50 and 55
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