AUDUSD – Retail traders have bought aggressively into recent Australian Dollar weakness, and our sentiment-based trading strategies have flipped direction and sold into AUDUSD declines.
Trade Implications – AUDUSD: Last week we highlighted the fact that our SSI-based Momentum2 trading system went long AUDUSD as a key reason to be bullish. Past performance is notindicative of future results, but the system has done well catching key turning points in the AUDUSD.
Yet that same strategy has flipped direction and has now sold AUDUSD from $1.0405, which lines up with our Senior Technical Strategist’s calls for an AUD short below $1.05. We really don’t like switching direction on a week-to-week basis, but if the facts change, we’ve got to change. There’s obviously risk that we might get chopped out yet again, but there’s too much evidence for AUDUSD for us to ignore—especially if we clear key support at $1.04.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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