Originally published by AxiTrader
Quick Recap
Like the little engine that can the AUD/USD is back near the highs for the month sitting just below the supply zone at 77 cents. So far this 77 cent level is a high hurdle and a bridge too far for the Australian dollar but unless something happens to strengthen the US dollar the preconditions for a break and run higher are growing.
What You Need To Know
Trading in financial markets is fairly simple, not easy but often simple. In the case of the Aussie dollar the price action tells us that traders and investors the world over are asking themselves one simple question.
Why should I sell the Australian dollar?
If you step through that argument the answer most folks will come up with is - I shouldn't.
So far we have commodity prices improving, we have stock prices holding firm, we have Australian growth remaining robust, we have the RBA with relatively high interest rates, and Australian bond rates relatively high as a result, risk appetite seems to be pretty solid as well.
Equally last night's OPEC deal is good for the Aussie because as a commodity currency it benefits when the commodity complex improves. So far this year we've seen signs that the secular collapse in commodities that relate to Australia may have ended and the cyle turned. So if OPEC can change the outlook for oil and drive it back into the mid $50 or low $60 a barrel region over coming months then this will reinforce the positives for the commodity complex and thus the Aussie dollar.
The only really reason that might give the sellers a reason to unload the Aussie is the convergence of overhead resistance I've been talking about for a little while now.
That's one factor among so many that are Australian dollar positive but it is a factor that is making traders and investors leery of buying what might be the top right here at the moment just under 77 cents.
Here's the longer term weekly chart once again. Tomorrow night is both the weekly and monthly close so where the AUDUSD ends in New York on Saturday morning is very important for many technical traders.
Looking shorter term the Australian dollar is still respecting the little 1-hour uptrend it has been in during the second half of September. Yesterday's low was essentially bang on support confirming short-term traders are watching this trend closely.
I have to be careful and temper my AUDUSD bullishness because the amount of overhead resistance in the 0.7700/0.7830 zone which has proved solid for such a long time remains. But a move above 80 cents in 2017 is increasing its odds.
Have a great day's trading