The thing that worries me about the AUD at the moment is that very few people are short. Sure there are the usual rally sellers but they are not comfortable about building and holding longer term short positions; the carry hurts too much and the fundamentals are screamingly bullish. Ergo, the vast majority of market positions are long ones. It is the logical position to hold, just as it was two years ago but remember what happened then.
Having a look at the weekly AUD/JPY chart, there seems to be a distinct possibility that a Head-and-Shoulders can form at some time in the next few weeks. The right shoulder hasn’t formed yet so we shouldn’t jump the gun. If it does and if the ‘risk trades’ suddenly fall out of favour, watch out.
