FXA – Andrew Thrasher

Are Aussie Dollar Bulls Waving A Flag Pattern?

Posted on November 19, 2013 by Andrew Thrasher, CMT

The Aussie Dollar appears to have created a flag pattern with the potential for an upside breakout to continue the trend that began a few months ago. This is the topic of my TraderPlanet article for this week.

Here’s a piece:

The most recent price action in $FXA is what I’d like to focus on today. We have what’s called a flag pattern, which is often considered a pattern of continuation for the previous trend. The short-term up trend in FXA from September to late-October acts as the flagpole and helps create an estimated target if the flag pattern breaks to the upside. The flag itself is created in the narrow channel that’s taken place over the last month.

Read the rest: Are Aussie Bulls Waving A Flag Pattern? (TraderPlanet)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Has the Aussie Dollar Recovered?

Posted on August 9, 2013 by Andrew Thrasher, CMT

On Tuesday the Reserve Bank of Australia lowered its benchmark rate to an all-time low of 2.5%. In his statement the Governor of the Reserve Bank, Glenn Stevens, said the Australian dollar “has depreciated by around 15% since early April, although it remains at a high level” and hinted at possible further easing. This put a bid under the Aussie Dollar ($FXA) as it caught support from a 2011 low near $89.

I’ve been watching the drop in $FXA as it broke through various support levels as traders kept the bearish bias on the currency from down under. In June I noticed that falling momentum had eased and was making higher lows as it diverged from price. However, price action kept the peddle to the ground as the down trend continued against the face of a rising Relative Strength Index.

We now are having our second test of the 50 level on the RSI as the indicator is still in a bearish range. Looking at the price chart we can see that $FXA is also up against its falling trend line after yesterday’s gap higher. Going forward I’ll be watching to see if price can break it’s downtrend on the back of rising momentum or if we treat it as resistance and continue lower.

Australian Dollar Hits Resistance

Posted on December 11, 2012 by Andrew Thrasher, CMT

The Australian dollar can often be used as a barometer for risk for U.S. equities. The correlation between the two is typically high, currently .87 over the last 20 days. As we’ve seen U.S. equities rally into the current sideways price action, the Australian Dollar has come to a level of resistance.

The recent rally off the October lows has taken the Currency Shares Australian Dollar ETF (FXA) up to a level it’s struggled to get past so far this year. We’ve seen FXA get to the $105 to $106 level, but it’s yet to break through. As the chart below shows, the current rally has been accompanied by flat momentum, based on the Relative Strength Index. The RSI has been having difficulty getting past 60, which is a warning sign for bulls. While we often view a break of 70 on the RSI as overbought, it also tells that there seems to be heavy buying interest in a security. When momentum is unable to advance alongside price buyers can lose confidence, putting a halt to a rally.

While momentum has stayed in this sideways action, volume has also been trailing off. As you can see in the bottom panel of the chart, since early November volume has been dropping, a possible sign the FXA is advancing on fewer and fewer buyers.

Next up we have the Commitment of Traders (COT) data for the Australian Dollar. In the bottom panel we can see the three main types of traders, commercial (dealers in the Australian dollar and considered the ‘smart money’), large (often institutions and hedge funds), and small (individual traders and smaller firms). The commercial traders have been aggressively building net-short positions, as we can see from the declining red line. When we see the ‘smart money’ take such a large stance in a market like this, we can expect the price action to follow suit, in the case – potential weakness.

Bulls will keep the $106 level in their sights, hoping to break through resistance while the ‘smart money’ appears to not think this will happen. We’ll see who wins out in the end.