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6 Aug 2013
Signs emerging to turn AUD bullish?
FXstreet.com (Barcelona) - The Australian Dollar has collapsed merciless since early May, when it broke a 1-year long range through 1.0150, a time when coincidentally, legendary billionaire Soros got well ahead of the herd to put on some heavy shorts.
However, most of the trading community were surely more cautious to react to the developing Aussie bearish trend, which saw the speculative community increasing the interest to pile on the short trade, to the point where it is getting really crowded, as recently reported by Greg McKenna, CEO at Global FX. That should be a first warning signal as to how much room for downside there really is as few are left to put on fresh shorts unless a major retracements starts to occur.
Interestingly enough, 'the Australian Dollar short' is starting to become a story widely covered by mainstream media, with the latest examples being two reports on Monday by two of the big ones such as the Financial Times and the Washington Journal, titled "Pressure is on for Aussie weakness", and "Australian Minister Seeks Weaker Currency", respectively.
According to Eamonn Sheridan from Forexlive: "You know what they say about the time something gets into the newspapers its likely over. Well, thats two articles about the weak AUD in the papers overnight. Time to start longer-term buying AUD on dips?"
We will obviously have to wait now for the RBA monetary policy outcome later today, as much of the near term performance in the Aussie will continue to depend on the action taken and hints given. However, it is worth highlighting that perhaps now is the time to start looking for further signs of a possible contrarian trade if conditions warrant.
One such example of another little sign of the bearish tide potentially turning - technical element - might be the broken relationship with the 20-EMA H1, having commanded the price rigorously lower since July 29 after last 0.93 topside failure yet the relationship became no longer relevant through last US session.
However, most of the trading community were surely more cautious to react to the developing Aussie bearish trend, which saw the speculative community increasing the interest to pile on the short trade, to the point where it is getting really crowded, as recently reported by Greg McKenna, CEO at Global FX. That should be a first warning signal as to how much room for downside there really is as few are left to put on fresh shorts unless a major retracements starts to occur.
Interestingly enough, 'the Australian Dollar short' is starting to become a story widely covered by mainstream media, with the latest examples being two reports on Monday by two of the big ones such as the Financial Times and the Washington Journal, titled "Pressure is on for Aussie weakness", and "Australian Minister Seeks Weaker Currency", respectively.
According to Eamonn Sheridan from Forexlive: "You know what they say about the time something gets into the newspapers its likely over. Well, thats two articles about the weak AUD in the papers overnight. Time to start longer-term buying AUD on dips?"
We will obviously have to wait now for the RBA monetary policy outcome later today, as much of the near term performance in the Aussie will continue to depend on the action taken and hints given. However, it is worth highlighting that perhaps now is the time to start looking for further signs of a possible contrarian trade if conditions warrant.
One such example of another little sign of the bearish tide potentially turning - technical element - might be the broken relationship with the 20-EMA H1, having commanded the price rigorously lower since July 29 after last 0.93 topside failure yet the relationship became no longer relevant through last US session.