Commercial traders in the Australian Dollar had a pretty spectacular year in 2013.
They sold the market at a premium to the U.S. Dollar and held their short positions through May’s decline to the low 90’s and turned around to position themselves on the long side for the July – October rally. Finally, they tipped their hand to the short side of the market one more time for the October to January sell off. This year, their success has continued. Our first Australian Dollar trade of the year got us long the day after the January lows were made. We’ve plotted their positions as well as the actual buy and sell signals on this chart.
Currently, the commercial traders are telling us that this rally in the Aussie is coming to an end. They’ve been net sellers every week but one since late January. Much of this has been the laying off long positions accumulated near the lows but the increasing pace of their selling over the last three weeks strongly suggests topping action. Some of this may be technical as Friday’s high of 92.47 falls nicely in between the half way and .618 resistance levels from the October highs to the January lows.
A SELL SIGNAL COULD BE CLOSE
Odds are good that the next lower close will trigger an official sell signal. Once we get it, we’ll place a protective buy stop at Friday’s high.
Trading with the momentum of the commercial traders on our side continues to put their power behind our trades and some speculative money in our pockets.
