We’re seeing some very sharp moves across the board these days and all this volatility is frigging wonderful. Finally you can get on a trade and see some decent movement in it rather than the ‘watching paint dry’ episodes we had earlier in the year.
However, the moves are also swift for those on the wrong side or those who are in profitable positions and have seen those gains evaporate. AUD/USD is my case in point. I started building my AUD/USD longs last June and although I cut some on the way down, and offloaded some up above, I’m toying with the idea of closing them all off and looking to see how the market plays out. The same for my AUD/NZD longs I’ve had since Feb.
The break of the 0.9200 area has been very significant and as the price tells us, the bears are well in control. 0.9100 is shaping up with significant support but it’s the 0.9080 area that we should look at closely too.
AUD/USD Daily chart 11 09 2014
Not only is the 50 fib of the 2014 swing up there but the 100 mma sits on the level too.
It’s the final big line in the sand before a move down to 0.9000, which is also boosted by the 61.8 fib 20 pips less at 0.8980. 0.9000 is the big psychological level and the pair will be in real trouble if that goes.
While the data overnight popped us up through the technical resistance at 0.9160/9200 it will be a different story for any normal market bounce so I expect the levels to put up more of a fight.
It’s no secret what the biggest driver is at the moment and that’s the US dollar, and when trading dollar pairs it should always feature in your decision making. It goes back to my post on balance and bias. It matters not what is happening in Australia at the moment compared to the US, and whether you like it or not the US will trump most countries every time. By and large the US economy and US dollar have been treading water but now there is increased optimism and that’s not going to abate anytime soon unless the data goes south in a big way.
The USD was a secondary thought to any trades previously but now it’s front and center.
