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Australian Dollar Might Bounce, but Crowds Too Willing to Buy

Australian Dollar Might Bounce, but Crowds Too Willing to Buy

David Rodriguez, Head of Product
ssi_aud-usd_body_Picture_17.png, Australian Dollar Might Bounce, but Crowds Too Willing to Buy

AUDUSD – We’ve made no secret of our preference for sharp AustralianDollar declinessince it broke $1.02, and indeed retail forex sentiment leaves us plainly in favor of continued weakness.

Trade Implications – AUDUSD: Hindsight is obviously 20/20, but the strongest argument in favor of Australian Dollar weakness probably came on the sharp breakdown in AUDUSD yield differentials and exceedingly one-sided retail FX trader sentiment.

Of course, the pair’s already fallen a massive 10+ percent (nearly 1100 pips!) from its April peak. Can it continue lower? Of course, and I think it will. Will it match its freefall of the past two months? Almost definitely not. It currently trades at a massive confluence of support, and the risk of a short-term bounce is very high.

That said, I still think it’s better to sell into historic declines rather than try and catch falling knives. I’ll look to sell any important bounces.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

ssi_aud-usd_body_1a_3.png, Australian Dollar Might Bounce, but Crowds Too Willing to Buy

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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