I’ve been looking at the AUDUSD in the daily and weekly charts and I think I’ve spotted a change in fortunes for this pair that have been in a bearish direction since February this year. Poor Aussies! So hopefully this might put a cheer for our friends down under. This COT chart indicates a possible long term reversal:
I’ve been watching the Commitements of traders (COT) closely and noticed the pair hit the 20% sellers mark (Non commercial) or 80% holding short positions. They have since been slowly reversing direction. This indicates to me that there is slowly more interest being applied to long positions in the aussie in the longer term. The blue and orange resistance lines represent the extreme areas where positioning have reversed.
Correlating this to the daily price chart, I speculate that if the pair breaches the bearish indicators, then the aussie may reversing to a bullish or ranging scenario. Here I found the 55 day blue moving average acting as a resistance line, a bearish channel in yellow and a red resistance line, that was previously support (from 19 June to 9 August) then turned resistance. The red resistance also represents the previous high, so passing it would indicate a higher high as well as a break of resistance. If the price breaches the moving average, exits the top of the channel and the resistance area, I would consider a reversal of the bearish trend on the aussie.
Will I use these as entry points, probably not, however I will use them as strong indications that I should go long when my system confirms an entry. This could be a good exit point for any long term traders with short positions.
Let me know if anyone has any trading opportunities they could develop out of this.