The trading action in forex is starting to pick up again with quickly changing setups. Of the many twists, the Australian dollar (FXA) continues to capture a lot of my attention. Currently, the Aussie looks ready to break out against the U.S. dollar.
AUD/USD is now positive again for the year, and, at the time of writing, it is breaking above its 200-day moving average (DMA). A break to new 2-month highs would confirm a continuation of the rally from the June lows (higher highs and higher lows) and firmly position the Australian dollar in bullish territory. Such a move would also force me to re-evaluate my overall net bearish position on the Australian dollar. For now, I am hedging with very short-term long positions on AUD/USD and AUD/CHF. These positions will get longer in duration and bigger in size if (once?) the bullish position of the Aussie is confirmed. It will definitely be difficult to reconcile such bullishness with the bearish global, macro-economic environment, but I also do not like fighting the market. At some point soon, I will assemble the evidence I am hearing and reading that the Australian dollar is being driven by the carry trade. If so, this trading action has important implications for “risk-on” and “risk-off” trading days.
Be careful out there!
Full Disclosure: Net short Australian dollar.
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Australian Dollar On the Verge Of Another Breakout
Published 07/17/2012, 12:52 AM
Updated 07/09/2023, 06:31 AM
Australian Dollar On the Verge Of Another Breakout
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Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
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