Commodity Currencies

The commodity currencies are trading a volatile range as Oil prices continue to spike in both directions. Therefore, we need to use the major MA’s as a guide more than a specific point of entry. The AUD like other pairs has retraced some its losses to the Greenback but the AUD is having a difficult time taking out the 50 day MA on the retrace. Furthermore, the line up of the major MA’s still suggests a falling price environment with the 200 MA above the 100 MA and the 100 MA above the 50 MA. Many AUD bears may view this as an ideal time to assume a short AUD position as traders can use the close proximity of the 100 and 200 MA to set their stop loss.


As we have highlighted before, note the similarities in the AUD and NZD chart patterns. Although the Kiwi has also staged a nice rally it is having a difficult time taking out the 200 day MA. It is clearly a technical level because price is moving horizontal with the moving average. The Aussie is moving parallel with 50 MA in a downward sloping fashion. With the order of the major MA’s consisting of the 200 above the 100 and the 100 above the 50, the current market condition suggest lower prices may be ahead, unless we see the NZD firm and trade cleanly above the 200 MA.


Of the commodity currencies the CAD is looking the strongest. Although the 50 MA is above the 100 MA, never the less, the 200 MA still sits above the faster MA’s so there is a slight bias towards a stronger CAD. Furthermore, the CAD bounced off of Support, or the 200 day MA and is currently testing the 50 day MA. We also see the presence of a Step Pattern, whereby lower highs and lower lows are observed, suggesting price has room to appreciate. A close below the current lowest Low or Resistance and the CAD bulls will come out in full force. However, a close back above the 200 MA followed by a close above the highest high, or Support, will have CAD bears adding shorts. Either way it is likely that the CAD will pull its sister commodity pairs with it.

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