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Monday, December 23, 2013

COT & Technical Review of Australian Dollar (and Gold)

Chart 1: Australian Dollar (FXA) And FXA Close Oscillator (CO)


Chart 2: Australian Dollar (FXA) And Australian Dollar Diffusion Index (DI)


Comments:

  • The intermediate-term trend is DOWN (chart 1).
  • Invisible hand, however, continues to ACCUMULATE weakness. Australian dollar's DI reading has risen to 86%. This bullish setup suggests a concentrated market primed for a rally.
  • Technical analysis suggests that the secular trend is down until the 2011 trading channel is broken to the upside (chart 2).  Any upside reaction within trading channel; therefore, must be considered a counter trend rally.

Australian Dollar's Correlation with Gold:

Chart 3: Gold London P.M Fixed (Gold) And Australian Dollar Diffusion Index (DI)


Strong bullish setups in the Australian dollar have a history of marking tradable bottoms in gold.  The path of least resistance is down, so don't anticipate a turn without technical confirmation.



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