Australian Dollar at Make-or-Break Levels
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Australian dollar – Retail forex traders are now their most net-long the Australian Dollar since the pair bottomed near the $0.8900 mark in September. We remain cautiously in favor of further weakness.
Trade Implications – AUDUSD: Last week we wrote that the Australian Dollar “still looked like a sell” as the vast majority of traders remained long. Yet such one-sided sentiment often coincides with major market turning points.
The difficulty is that these reversals are only clear in hindsight, and indeed our purely sentiment-based Momentum2 recently sold AUDUSD from $0.8913. Until we see signs of a significant sentiment shift we’ll remain in favor of selling Aussie Dollar weakness.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.