Are commodity currency pairs reversing their primary trends?

This pair AUD/USD has been on our radar for quite a while now because it seems that the downtrend beginning early this year is forming a bottom. Clearly momentum began to fade even before it made its last low at 0.7016 and the RSI divergence serves as evidence. A key technical area of resistance that should be broken by the buyers is the zone at 0.7317-0.7336 and this will signal a probable reversal of the primary downtrend. Adding to the weight of the evidence for the reversal swing will be a complete cross of the RSI above the 50 mid-point level.

Meanwhile, other AUD pairs(AUDCHF and AUDACAD ) nicely reversed much earlier (major winners in our portfolio ) with the exception of AUDJPY that has been trying to grind out of a resistance zone(82.50-83.03) and in the process has formed and broken out of a Bull Flag on the Daily chart. This potential reversal swing is further supported by the RSI moving above the 50 midpoint area on the weekly chart. It will be interesting to see how this commodity currency will play out as we head towards the end of the year given the fact that the New Zealand Dollar,(also a commodity currency) has broken out of key technical resistance levels early this month, and therefore signalling a potential primary trend reversal.

 

Analysis courtesy of Denis Mwenga.

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