Trading opportunities on the currency pair: On the weekly chart, a doji and a bearish signal have formed on the Stochastic oscillator. On the daily chart, a double top has formed. Moreover, there is a bearish divergence on the AO and CCI indicators. In this idea, I’m envisaging a fall in the rate to the trend line at 0.7480 by the 27-29th of March 2017. If this fall gathers pace and the rate closes below the trend line, then we might see a slide to 0.7262. It would be prudent to rule out such a fall if the daily candle closes above 0.7790.
Background:
The previous idea on the Aussie dollar was published on the 26th of December 2016. At the time of publication, the AUD was being quoted at 0.7171 USD (minimum candle: 0.7160). The target stayed at around 0.7054 up to the 3rd of February 2017.
Upon reaching the intermediate target of 0.7145 before the new year in a thin market, I allowed for a restoration of the Aussie dollar by 100-150 pips. The strengthening of the Australian dollar was amplified after a rebound of 195 pips and a breaking through of the trend line (0.7368). The AUD/USD rate grew to 1.0582 (its highest since 10/04/2013).
Current situation:
According to the latest COT (Commitments of Traders) report for the 21st of February published by the CFTC (Commodity Futures Trading Commission), large speculators have increased their long positions on the Aussie dollar. Small speculators increased their short positions.
Large speculators (non-commercial): long positions have increased by 9126 contracts to 86,060, and short positions have fallen by 19 to 54,834. Net long positions have risen by 9,145 contracts to 31,226.
Small speculators (non-reportable positions) have increased long positions by 21 contracts to 31,936. Short positions have increased by 241 contracts to 24,358. Net long positions have fallen by 220 contracts to 7,578.
Hedgers (commercial) have reduced their long positions by 859 contracts to 28,663. Short positions have risen by 6,562 contracts to 58,513. Open interest has grown by 13,692 contracts to 148,821.
