Aussie dollar – Andrew Thrasher

Three Bullish Signs in the Australian Dollar

Posted on June 10, 2013 by Andrew Thrasher, CMT

I’ve discussed the Aussie dollar a few times on the blog in the past few months. It’s been declining for just about the entire year, down nearly 8% as of Friday. In my weekly piece for TraderPlanet I take look at three bullish signs for the currency.

Here’s a blurb:

While the waterfall hasn’t been turned off, there are some bullish notes that are beginning to develop on the chart and in the sentiment data for the Aussie Dollar. The drop in 2012 looks very familiar to the move we’ve been experiencing this year. Since price has fallen to last year’s low we are going to compare the similarities between the bottom in ’12 and where we currently sit.

$FXA has been in a strong down trend and is unlikely to flip directions overnight. Go read the rest to see the three signs that may be in the bulls favor.

Source: Three Bullish Signs in the Australian Dollar (TraderPlanet)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Analyzing the Drop in the Australian Dollar

Posted on May 13, 2013 by Andrew Thrasher, CMT

The Aussie Dollar ($FXA) has been experiencing some weakness with momentum turning bearish. However there are a few bright spots for the currency down under. In March I wrote about the bullish COT data for the Canadian dollar, British Pound, and the Australian Dollar. All three put in gains in the following weeks. $FXA is now seeing similar action it the latest COT data while still experiencing headwinds from the increase in selling.

Here’s a piece:

Over the last month the Aussie dollar ($FXA) has been experiencing some weakness, dropping 5% in April. Let’s take a look at some of the earning warning signs that lead to the drop as well where the Aussie dollar could be heading.

While the drop has been quick, there are some signs we can look at that foreshadowed the move and help us examine future charts of not only the Aussie but other securities as well. In early April the Currency Shares Australian Dollar ETF ($FXA) attempted to break above resistance set over the previous twelve months at $105.

Source: Analyzing the Drop in the Australian Dollar (TraderPlanet)

The Currencies Hedge Funds Hate

Posted on March 12, 2013 by Andrew Thrasher, CMT

One of my favorite data sets is the Commitment of Traders figures that the CFTC released each week. It shows us how various types of traders are positioned within various futures markets such as corn, Treasury’s, copper, and multiple currencies. A growing theme recently has been selling of certain major foreign currencies by the Large Trader category, which is often made up of hedge funds.

When studying COT data I primarily look at the Commercial Traders (‘smart money’) and the Large Traders (large hedge funds and institutions). The Small Trader category can be useful when at extreme reads but most of the time it just sits near the zero line so we don’t glean very much from these odd-lot traders.

First up we have the Canadian dollar ($FXC). Since mid-2009 Large Traders haven’t spent much time net-short the loonie and typically when they are we have seen the loonie eventually bottom out. Currently we can see that the Commercial Traders are the most net-long they have been in three years while hedge funds and Small Traders are historically extremely net-short.

Second up is the British Pound ($FXB). Over the last few years it hasn’t been unusual to see Large Traders go back and forward between being net-long and short the Pound. What I find interesting is the magnitude that the Commercial Trades have taken a net-long position, almost to the previous high from mid-2011. Hedge funds are currently net short but not yet to the same degree as in 2011.

The Australian dollar ($FXA) is another market that we typically see Large Traders stay net-long. And as of last week they still were but are very close to flipping shorting. We looked at the uptrend in the Australian equities last week, although a shift in the Aussie dollar could create some headwinds for equity bulls.

So these are three currencies that Large Traders don’t seem to be big fans of right now. However, typically when this rubber band is expanded, in some cases to the current level, we see it relax/consolidate or snap back. This could have been created as part of the ‘risk on’ nature the market has adapted. This would make sense considering two of the currencies hedge funds have befriended are the Mexican Peso, the New Zealand Dollar, and the U.S. Dollar. Going forward, if we begin to see strength in the Aussie $, the Pound, or the Loonie we may see a short-squeeze that sends the Large Traders for the exits.

Australian Dollar Hits Resistance

Posted on December 11, 2012 by Andrew Thrasher, CMT

The Australian dollar can often be used as a barometer for risk for U.S. equities. The correlation between the two is typically high, currently .87 over the last 20 days. As we’ve seen U.S. equities rally into the current sideways price action, the Australian Dollar has come to a level of resistance.

The recent rally off the October lows has taken the Currency Shares Australian Dollar ETF (FXA) up to a level it’s struggled to get past so far this year. We’ve seen FXA get to the $105 to $106 level, but it’s yet to break through. As the chart below shows, the current rally has been accompanied by flat momentum, based on the Relative Strength Index. The RSI has been having difficulty getting past 60, which is a warning sign for bulls. While we often view a break of 70 on the RSI as overbought, it also tells that there seems to be heavy buying interest in a security. When momentum is unable to advance alongside price buyers can lose confidence, putting a halt to a rally.

While momentum has stayed in this sideways action, volume has also been trailing off. As you can see in the bottom panel of the chart, since early November volume has been dropping, a possible sign the FXA is advancing on fewer and fewer buyers.

Next up we have the Commitment of Traders (COT) data for the Australian Dollar. In the bottom panel we can see the three main types of traders, commercial (dealers in the Australian dollar and considered the ‘smart money’), large (often institutions and hedge funds), and small (individual traders and smaller firms). The commercial traders have been aggressively building net-short positions, as we can see from the declining red line. When we see the ‘smart money’ take such a large stance in a market like this, we can expect the price action to follow suit, in the case – potential weakness.

Bulls will keep the $106 level in their sights, hoping to break through resistance while the ‘smart money’ appears to not think this will happen. We’ll see who wins out in the end.

Follow Up on the Aussie and Nat Gas

Posted on September 6, 2012 by Andrew Thrasher

Today I wanted to look back on some of the charts that were discussed in the last few weeks.

First up is the Australian Dollar, which has been falling for a couple of weeks. On August 21st we looked at the rising channel that the Aussie had created as well as the sideways action in momentum based on the RSI indicator. We saw momentum and price breakdown, taking $XAD down almost 3%. From here, momentum has flipped over and is approaching a level that has shown $XAD to be oversold, we’ll see what happens if and when it gets there. There is still some fundamental impacts that could affect the price action in the Aussie Dollar as the RBA considers taking action to help prop up their struggling economy.

Next up is natural gas. We’ve been watching the ping-pong match happening between the 50-day and 200-day moving averages. We had a slight break below the 200-MA before we see the spot price of nat gas bounce back up to its 50-day.