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Aussie Vs Dollar: Approaching possible 20 week trough

The Aussie dollar was clear cyclically until the last few months where it possibly put in a straddled 18 month trough back at the end of September 2014. This is in line with a few of the other USD pairs where there is some devaluation happening. Lets look at the long term picture, weekly candles:

AUDUSD_£__daily_12_02_2015There was a large trough straddled back in March 2013 which triggered the current bearish decline. The 18 month trough in September of last year is a very subtle trough indeed and this is what lends some ambiguity to the current picture of AUDUSD. Having said that I am fairly confident as we are now over 22 months from the trough in 2013, far too long to consider an 18 month trough forming now, in my opinion. The average length of an 18 month nominal cycle in this pair is around 17.8 months. I think the most likely scenario is infact a 20 week about to bottom. Lets look at the medium term:

AUDUSD_£__daily_12_02_2015medHere is the decline from the most recent 18 month (possible) trough. Pretty bearish as you might expect. I think there is going to be a few more days of down and a new low should form. When that does I will be looking to enter on a cross of the 20 day VTL or FLD, shown below:

AUDUSD_£__daily_12_02_2015smallThis will setup the target for an ‘A’ category transaction. This should be a nice pop over the next month or two but do bear in mind the recent bearish trend. I expect this to behave in a similar manner to the GBPUSD pair I have been tracking which also recently put in at least a 20 week trough.

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