The Secret Currency War Series:-  Australian Dollars Collapsing Soon?

Australia is one the world's biggest producers of mineral riches. The whole national's well-beings are tied to the mineral resources and exports. That's why AUD is called a commodity currency. (same as Canadian Dollars). With the Americans' QE2 (nobody seems to be talking about the Japan's version though theirs are really the mother of them all) , every "experts" are expecting the global commodities prices will blow up. If so, then commodity currencies like the AUD should also be shooting up !

But is it ?

In its weekly chart, I take note that the Stochastic has been falling down from the overbought zone. It looks like it may be crossing down its 80's signal line soon. If such, it will be offering an intial sell signal. The MACD is turning around at the moment, but it still remain positive. The D+ , though remains above the D- has been registering lower peaks and the flattened ADX is pointing at a bull losing its steam. The upper Bollinger Band support of 0.9799 must be defended. If price is able to close below that level by this Friday, then we would have another sell signal.

The higher high achieved these past few weeks compared to the high done on November last year may be  forming  a bearish divergence. Though I must admit it may NOT be a picture perfect one. And this is NOT confirmed yet at the time of writing as we need to see the MACD complete its turning, but I would be monitoring it with a keen eye on this item.




I am getting so excited over the AUD's daily chart. The bearish divergence has been so beautifully formed with the MACD fast crashing down towards its zero signal line. The Stochastic is also fast approaching its own 50's signal line. Upon crossing down, both would offer a concrete sell signal. The D- is over the D+ which confirm a sell. Now I am watching for the ADX to rise in order to confirm a new trend which is usually important for a more profitable trade.

Prices have already gone below the middle Bollinger Band which is effectively a 20 period moving average. The lower Bollinger Band support of 0.9780 will be next  support level, when if price is able to close below that level, I think we would see a real nasty crash down.

The weakening AUD may be confirming what a small minority of the market analysts that think the Australia's economy has already long overdue for a major correction. Her inflation is high, the property market is nothing but a bubble, the mineral prices have been over extended. And Australia's economy has been closely tied to China's and China's economy bubble may also be ripe to burst . As a newly regenerated Republicans controlled Congress will definitely get tougher with their right wing "let trash the Chinese Commies" thinking. We may see many protectionism policies disguising as new trading rules that will hurt China. Unfortunately Australia is getting caught in the cross fire.

Summarily, AUD should crash down big time. It is going to be one of those extremely profitable trade.