Fishing For a Low in the Aussie
- Several cyclical methodologies converge over the next few days
- Last couple of weeks in December have a positive seasonality
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AUD/USD recorded a new low close for the year on Wednesday. The decline to this point has been impressive with the exchange rate losing more than 8 big figures since its failure at the 200-day moving average back in October. However, the decline is now more than 40 trading days old. One of our favorite trend cycle lengths is around 45 days as this marks a Gann Commodity “death cycle” where short-term reversals are more frequent. Interestingly this day count will roughly coincide with the Winter Solstice (in the Northern Hemisphere) this weekend which is another potentially important inflection point in Gann theory. It is also worth pointing out that the last few weeks of December are one of the stronger periods of the year for the exchange rate on a seasonal basis. Factors certainly seem to be aligning for at least a short-term reversal in the Aussie over the next week.
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: 0.8960(Gann), 0.9035(Gann)
Support: 0.8800 (Gann), 0.8760(Gann)
Strategy: Buy AUD/USD
Entry: Buy AUD/USD at .8805
Stop: 1-day close below .8755
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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