Commodity Currency Update


The AUD is still trending up but with embedded high volatility. On its recent pullback it found support at it’s 200 day moving average which also coincided with trend line Support (see blue arrow). The 50 day MA is upwards sloping and is positioning itself to cross the the 100 MA. That cross would lend added support to the AUD move north. However, a break back below trend line Support and the 200 day MA would signal a potential bearish sentiment.


The NZD clearly broke below trend line Support (see blue arrow). However, the NZD found support at the 100 day MA. It has since retaken its position above all three major MA’s. Additionally, the 50 MA has just completed its cross above both the 100 MA and 200 MA which lends added Support to the NZD on a move higher. If the 100 MA crosses back above the 200 MA the NZD will be headed back into trend line support and resistance. However, if the NZD retraces its move and the 100 MA fails to hold NZD Support it may signal further weakness ahead.


Of the Commodity Currency pairs this one in particular has been the most difficult to trade. You can observe the side ways price action, indicating that the CAD has been range-bound with a very wide and volatile top and bottom, or Support and Resistance. Notice that the Resistance line, or the topside, we drew with a slight downwards slope. It implies that volatility is easing with trend support leaning towards Canadian Dollar appreciation. Another observation are the location of the major MA’s within the range which is working to create the volatility we see. Additionally, the MA’s are not aligned in any order as price action has been whipping around. The market is looking for one of two outcomes at this juncture; a break lower beyond major CAD Resistance at 1.0150 or a break above the CAD Support and above the prior high (see blue arrow). Either move should dictate the future of that CAD.

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