My foreign currency stances at miAnalysis have been bearish toward the yen and euro, with standing long recommendations in EUO (ProShares UltraShort Euro) and YCS (ProShares UltraShort Yen).
NEW UPTREND?
Now AUDUSD is on my radar as a long candidate amid the prospect for a near-term uptrend. There’s a good chance any move higher would be a secondary reaction within a larger downtrend. But that’s all a position trader would need for a decent profit if price indeed rallied.
KEY CHART ACTION
You can see on the weekly chart that the period of churning from mid-July halted the downtrend since April and confirmed technical support at a wide demand zone. During this time, RSI averaged dropped to deeply oversold readings indicating the market should be at or near a point of seller exhaustion.
LEVELS TO WATCH
Chart resistance at 0.95799, based on the June low, points to significant upside potential if the shorts start to cover and momentum traders go long. The daily chart provides a clear view of how selling pressure wasn’t powerful enough last week to push price to a lower low. AUDUSD needs to clear 0.92321 in order to confirm a higher high and higher low, tilting the odds toward further upside ahead.
ETF PLAY
FXA (CurrencyShares Australian Dollar) provides a great way to position for a strengthening trend in the Aussie through an exchange traded product.
