Failed Breakouts Provide Buying Opportunity in the Australian Dollar

(This is an excerpt from an article I originally published on Seeking Alpha on October 25, 2013. Click here to read the entire piece.)

Ever since news of Chinese banks making massive write-offs and a parallel spike in China money rates stoked renewed fears over the Chinese financial system, the Australian dollar (FXA) has pared recent gains. I have used this opportunity to switch out of a net short to a small (I remain wary!) net long position as I indicated in the last post on the Australian dollar. Interestingly, futures traders are looking past the latest churn in China financial news and seem more focused on the slightly hotter than expected inflation numbers in Australia.

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Australian dollar swings downward for the weak despite strong inflation numbers
Australian dollar swings downward for the weak despite strong inflation numbers

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While the breakout above the 200-day moving average (DMA) looks much weaker, the Aussie remains in a strong uptrend from the W-bottom
While the breakout above the 200-day moving average (DMA) looks much weaker, the Aussie remains in a strong uptrend from the W-bottom

The Aussie's second breakout attempt against the Japanese yen fails to follow through. Important test of 50DMA likely coming up
The Aussie’s second breakout attempt against the Japanese yen fails to follow through. Important test of 50DMA likely coming up

Source: FreeStockCharts.com

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Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on October 25, 2013. Click here to read the entire piece.)

Full disclosure: net long Australian dollar

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