(This is an excerpt from an article I originally published on Seeking Alpha on November 24, 2014. Click here to read the entire piece.)
One thing about a trading range is that it gives both bulls and bears a lot of trading opportunities.
The latest disturbance of equilibrium in the Australian dollar (FXA) was the surprise rate cut from China’s central bank. At the time it helped the Australian dollar surge against all major currencies. At the time of writing, the currency has already given up most or all its gains against those same currencies, particularly the U.S. dollar. The chart below shows that FXA continues to pivot around the previous 2014 low as the current trading range extends.
Source: FreeStockCharts.com
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Source: RBA Rate Indicator
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Be careful out there!
Full disclosure: net long the Australian dollar
(This is an excerpt from an article I originally published on Seeking Alpha on November 24, 2014. Click here to read the entire piece.)