Back on my AUD short bias after a recent slide in iron ore prices to put pressure on the Australian dollar. Is there a bounce ahead and will that be the right time to jump in?
AUD/NZD Short on a Bounce
In case you missed it, the Australian dollar is not having a great couple of sessions, likely attributed to the slide in the price of iron ore in China, one of Australia’s biggest exports.
The fall in iron ore prices seems to have halted at the moment with China’s import demand still strong, but it’s possible it might be just the start of further weakness for iron ore and the Aussie if supply from Australia and Brazil continue to increase.
So, I’m short-term bearish the Aussie once again, this time against the Kiwi as the momentum to the downside was strong there. Also, I like the interest rate advantage that the Kiwi has, and finally because both will get their quarterly inflation data next week, so volatility may stay up in the short-term.
From a technical perspective, on the one hour chart above the stochastic is showing short-term oversold conditions as the pair seems to be finding buyers at previously strong support areas. So, I won’t short for now, but if AUD/NZD bounces, I’m looking for some resistance under or around 1.0950 to hop on my short bias. Stay tuned for any moves I may make or just completely abandon the idea all together if the market drivers for either currency or risk sentiment shifts. Until then, good luck and good trading!
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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