15 Jan 2014
Flash: AUD/USD: reinforcing the idea of a bottom - FXstreet
FXstreet.com (Barcelona) - Goncalo Moreira CMT, Technical Analyst at FXstreet.com comments that as a harbinger of trends for commodities, gold is also a “mirror mirror on the wall” for the Australian dollar.
Key Quotes
“The strong correlation relationship between these markets will be used here to examine the very healthy retreat they have been printing in the recent weeks.”
Since the bottoming in December, correlation (50-day) has came up to the usually higher levels while a relative strength analysis, with the ratio pointing down, is testimony of gold under performing the Aussie.”
“Not that gold hasn't rallied as did the aussie, but because gold is touching a previous higher low made in December when the Aussie was still touching carving the bottom. As see in the below chart, the ratio has flipped support and rejected the its 20-dy SMA now sloping downwards.”
“This is indicative of an out performance of AUD/USD relative to gold in next weeks. What the relative strength doesn't say is in which direction.”
“In the very short-term, keep an eye to the RSIs, because both point to an upward movement. The key levels 50 (in gold) and 40 (in AUD/USD) have been rejected last week and should be used since then as oversold borders. Should they survive today's whiplash, expect the whole accumulation phase to ignite a short covering rally.”
Key Quotes
“The strong correlation relationship between these markets will be used here to examine the very healthy retreat they have been printing in the recent weeks.”
Since the bottoming in December, correlation (50-day) has came up to the usually higher levels while a relative strength analysis, with the ratio pointing down, is testimony of gold under performing the Aussie.”
“Not that gold hasn't rallied as did the aussie, but because gold is touching a previous higher low made in December when the Aussie was still touching carving the bottom. As see in the below chart, the ratio has flipped support and rejected the its 20-dy SMA now sloping downwards.”
“This is indicative of an out performance of AUD/USD relative to gold in next weeks. What the relative strength doesn't say is in which direction.”
“In the very short-term, keep an eye to the RSIs, because both point to an upward movement. The key levels 50 (in gold) and 40 (in AUD/USD) have been rejected last week and should be used since then as oversold borders. Should they survive today's whiplash, expect the whole accumulation phase to ignite a short covering rally.”