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Australian Dollar May have Set Short-term Bottom

Australian Dollar May have Set Short-term Bottom

David Rodriguez, Head of Product

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AUDUSD–Retail FX traders spent much of 2014 and 2015 long the Australian Dollar as it tumbled versus its US namesake, but a recent build in selling suggests that the commodity currency may have finally turned the corner.

The ratio of long to short positions in the AUDUSD stands at -1.97 as 34% of traders are long. Yesterday the ratio was -1.12; 47% of open positions were long. Long positions are 11.0% lower than yesterday and 18.6% below levels seen last week. Short positions are 56.1% higher than yesterday and 40.1% above levels seen last week. Open interest is 24.5% higher than yesterday and 20.4% above its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the AUDUSD may continue higher. The trading crowd has grown further net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

See next currency section: NZDUSD - New Zealand Dollar Likely to Rally Further

--- 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.

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