17 January, 2018
by Rob Zdravevski
The AUD is trading at 0.7980 and I feel that the current short term uptrend in the AUD is stretched.
Albeit it is a strong trend and still intact, the AUD/USD cross is overbought on many technical indicators. I expect a regression to its short term daily mean, which is approx. 0.7750;
before it resumes its rising trend.
Should the AUD close this week above 80 cents, then the chance of a pullback to 0.7750 weakens and I’ll look for it to test 0.8260, 0.8350 and then 0.8550.
Whereas a break below 0.7530 would signal the end of the uptrend and thus I’d call it a trend reversal.
The correlation of CRB (Commodities) Index to AUD is also high. Currently the CRB and the Canadian Dollar (CAD) are both exhibiting the similar trends, moving average and other technical traits as the AUD/USD cross.
Interestingly, I wrote the following to a client who asked for an opinion about the Aussie on Dec 15, 2017.
“It’s starting to form a new uptrend, albeit its yet to be confirmed as a strong trend yet.
With its current price of 0.7670, its initial target is 0.7770 and it breaks that then I expect it to test 0.7900
A weekly close below 0.7610 would nullify this view as it would resume a test of the 0.7500 level”