Look beyond ordinary analysis
It was an extraordinary week for the Australian Dollar.
It started on a bad note with Building Approvals disappointing the market with a negative 7.5 vs a negative 2.9% expected. Chinese manufacturing PMI didn’t help with a lower than expected print in the same day.
The bad news didn’t stop AUDUSD from climbing towards 0.7250 resistance.
Later on AUD GDP q/q printed positive 0.6% vs 0.5% expected and +1.1% previously revised.
This was followed by better than expected Trade Balance on Thursday.
Excellent news was reflected in the AUDUSD charts.
It seems like many traders were caught selling the resistance at 0.7250 area.
Towards the end of the week, Aussie broke resistance and closed @ 0.7430, the level not seen in this markets since July last year.
AS per chart below, we see AUDUSD being in sustained uptrend since the end of January 2016.
Could the trader foreseen the bullish move before it happened?
Did the trader have to wait for the good economic news to position himself on the right side of the market?
Seems like many smart traders bought this market weeks ago and we could see it happening.
COT data once again predicted higher prices in AUD futures with a deadly accuracy. Please refer to How Commitments of Traders report predicted USDJPY decline. for another similar case.
Commitments of Traders data shows non-commercial traders had become NET LONG in AUD futures a number of weeks ago.
Commitments of Traders report ONCE AGAIN proves be invaluable leading indicator for the smart Forex Trader. If watched closely it allows Forex Trader to position himself before major events take place.
See how C.O.T report predicts a market swing week by week.
As per chart above, I would like to see the price above the resistance of 0.7420 before considering long term bullishness. For now, it seems like AUDUSD will range around the current levels for the week to come.
C.O.T data shows non-commercial traders became NET LONG in AUD futures for the first time since April 2014. Historically, the price did not follow the bullish sentiment for long so I would be careful here and wait for more confirmation.
AUDUSD buying continued into last week despite a negative price action. Daily charts suggest AUDUSD rebounded from the major resistance at 0.7230 and it looks very bearish for now.
COT data shows a different picture.
Non-Commercial traders became NET LONG in this market last week (as noted below).
This week they added another 5.7K long positions and covered 1K short contracts. This is after they added over 2.5K longs and covered over 5K shorts in the previous week.
This is the second week with Non-Commercials being NET LONG in Australian Dollar futures.
They now hold 72K long contracts vs 62K short positions. I would expect prices of Australian Dollar to increase in the coming weeks.
Again the price followed bullish sentiment among Non-Commercial traders from few weeks ago when they became NET LONG in AUD futures.
This week, the same pattern continues.
NC traders added another 4K long positions to their portfolios and reduced shorts by 3.3K.
This suggests further increase in price in AUD Dollar in the coming weeks.
3,954 total views, 11 views today
3,955 total views, 12 views today