I have been barking up the short-Aussie-tree since the beginning of the year. See post [#1], [#2] on AUDJPY, and [#3], [#4] on AUDCAD for the long term analysis. (Also see my post on being early shorting the Aussie.) Anyway, now that AUDUSD has backed off the 9300 level with a bang, it seems that the trend reversal in the Aussie is getting clearer. Why do I say that? Notice the sequence of recent AUDUSD price action depicted in the daily chart of Figure 1.
- Breaking below lower long term trendline (thick brown line, Fig. 1) on Dec 14 followed by a 300 pips down move
- Reversing on Dec 22 at 8730 price level, right on the last long term support line
- Testing the same trendline in #1 from below and gliding along it since the new year
- Bouncing off the previous resistance at 0.9330
- A rapid breakdown right to the neckline support at 0.9100
Meanwhile, the breakdown of gold price (Fig. 2) is helping to keep the downward momentum in this currency pair. Now that recent moves are confirming my long term Aussie short outlook as discussed previously ([#1], [#2], [#3], [#4]), my plan is to stay on the short for the long haul. My target on this dive for the AUDUSD is down to 0.9000 corresponding to the long term support line of #2 in that list above. Of course, prices don't go one way. So remember to manage risks and be prepared for some probable counter-trend moves. [caption id="" align="aligncenter" width="580" caption="AUDUSD, daily chart"]AUDUSD, daily chart[/caption] [caption id="" align="aligncenter" width="580" caption="Gold futures (GC)"][/caption] If you've been following my analysis, you'll see that I've converted from shorting AUDJPY to shorting AUDUSD. The simple reason is that USDJPY looks to have bottomed out and is on a run upward. Thus, the US dollar has more potential strength than the yen to go long. Lastly, as the title says, I also shorted AUDCAD at 0.9546 for the long term. See Figure 3. That short is playing out nicely as well with an [amazing long term bearish setup][#3]. [caption id="" align="aligncenter" width="580" caption="AUDCAD, daily chart"]1[/caption]