Second COTD post focuses on another currency, the Australian dollar. Here, we are looking at the longer-term view dating back almost two decades. The AUD bottomed in early 2000s and marked on a huge bull market, where it doubled against the US Dollar. However, the recent peaked occurred in middle of 2011 at $1.10, and now the Aussie currency has been in a strong downtrend falling all the way back to 75 cents.
Australian Dollar is oversold & at major support level
Source: Short Side of Long
The chart shows that the currency has found some kind of a support at a long term trend-line dating back to two other major bottoms (2001 and 2009). When we look at the distance away from the 200 day moving average, the recent sell off in the Aussie was very extreme and only second to crash event during Lehman Bankruptcy. If my previous post holds any weight, and the US Dollar Index is correcting, then the oversold Aussie could benefit with some kind of a rebound right here.
Disclosure: I'm keeping my short positions in the AUD however, I have now opened up a new long position as a short term trade as well.