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September 13, 2021

Institutions Dumped The Buck- How To Trade This

Frank Cabibi

9/13/2021

Big money has been moving out of Australia's currency for nearly a month now which has been the biggest drop in long contracts in this amount of time year-to-date. Australia's dollar index (AXY) is up 0.06% at 73.61 on the day after rebounding from the lows around 71.19.

Our outlook

Australia's economy has surprised investors with a beat in GDP and jobs numbers in the most recent reports. Having said that, institutions have been selling out of the buck for about a month now at an alarming rate which is rather concerning for the average investor. A little while back, I argued that Australia had a good chance for rebounding in this article. Price jumped over 2% in the next few days after that article, but the run was very short term. AUD/USD rose after a good GDP, but it couldn't maintain itself above the 0.74200s and put the pair in a state of consolidation. So until big money changes their sentiment toward the currency, I think it would be best to stay away from long plays and look to ride the momentum to the downside. Long term, the currency looks like a good long play, especially if they keep reporting good jobs numbers. But right now it's struggling with massive futures contract selling that will most likely continue to put pressure on the buck.

Trade Setups

AUDUSD

This pair fell back under the 0.74200s and is now riding the 50 DMA on the 1D chart. It looks like price will either consolidate between these two levels of support and resistance, or it will slowly bleed lower under support. In the past, this pair has historically made extended losses after a short rise in price according to this year's performance.

AUDCAD

AC broke out of a long term channel and is now hovering at the top trend line on support. If momentum is strong enough, it could come up to test the previous high at 0.94185. Some bullish signs here on the 1D chart, but if it does end up moving bearish, we could see a test on support around the 50 DMA.

AUDCHF

AUDCHF actually looks the most bullish out of these pairs right now. Price is bouncing up from the 50 DMA and testing support which is now a triple top on the 1D. If there is enough strength, price could come up to a falling trend line around .68495.

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