G'day John - Not watching this pair for trade purposes directly as I am mainly looking to move Us dollars to NZ sometime...then back and forth as the pair allows on occasion. That said, both the NZD/Us & AUD/Us have dropped significantly the last 2 early mornings here down under. Both appear weak, with the NZ having broken the 0.5775 barrier with some strength. Both appear to potentially be setting up some type of inverted - & S, with the right shoulder just now forming. And that might coorespond with lower anticipated interest rates in both NZ & Oz. A long term move...but worth keeping an eye on. jongalt

This was actually my analyst pick for today.

I think the larger trend is clear, and many of the yen crosses are beginning to roll over; but I won't jump into a short until AUDJPY confirms a break below 63.00 / 62.75. From a big picture standpoint, I am of the belief that there is still a lot of deleveraging necessary and policy makers won't be able to hold back the global recession. However, it will be all about speculation and whether the current market price reflects the worst of speculation.

Should 63 give, I will quickly shift my focus to 55 as the trade plays out. That could be a bigger (and longer-term) move as it represents a multi-year support level that was tested a few times a number of years ago.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Dear John K

Thanks for the response. I guess your read was right as it has now broken the 62.75 by a wide margin and has hit near 60. So is this safe to say that we are now looking at challenging the 55 mark?? or there will be some correction before that as it will probably be the case with the DOW and the Nikkei? Thanks

Honestly, I have no clue whether we will get instant continuation or a brief retracement. At this point, it isn't traditional technicals or fundamentals that are driving the market, but the volatility shifts in risk appetite. That is just something you have to keep on top of and manage trades appropriately.

I think there could be some pull back in the Asian session (as risk and equity trends in that session can often be construed as follow through); but by the European session, we will start to find genuine direction on the next 24 hours.

What do you think?

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

John, what do you think about going long in the Aud/Usd? with the inverse head and shoulder pattern forming and the bullish engulfing pattern on the daily chart, what do you think? Price also seemed to have bounced off of the 61.8 fib level from the advance from 60.05-70.14

I attached my AUDUSD chart. Are you looking at something similar?

For me, the dominate trend is still irrefutably bearish. I sometimes trade against the dominant trend, but it is in small size and targets are fractions of what a retracement may ultimately be. The greater probability here is that 0.60 would be tested before 0.75.

However, if you consider that descending trendline that I have below the neckline of an inverse heads-and-shoulders, then a break above that level could certainly give you a good response from momentum. That may still be a ways off however.

I would saw a confirmed break of 0.69 would be good for a a move to 0.73. However, I would reevaluate any bullish expectations should we drop below 62.50 as the formation -&S formation would then need to turn to double bottom to offer another bullish call (and -&S reversals play out better as they offer a better sense of congestion and reversal).

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

a break of the neckline could see a breakout head towards .75

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Jamie Saettele is the author of Daily Technicals, Currency Crosses, and COT on DailyFX.com. He is also the author of the recently published Sentiment in the Forex Market.

Thanks for the response John. I am awaiting a test of the shoulder region and or a break of the neckline to make an entry. That way, I can use a tight stop.

It seems like the inverse -&s formation on AUDUSD could come with some choppy breaks and burst of volatility.

First, there is a notable falling trendline from the late September highs (which is better seen on a lower time frame chart). A break of this trendline could give a strong push to the neckline that Jamie drew; but then you would need enough momentum off of this break to overtake 0.7050 resistance.

With all that being said though, we do still have the dominate bear trend in place and the RBA is expected to drop their benchmark rate at a fast clip going forward. IMO, a drop below 0.6350 would invalidate the -&s formation and could probably push us below 0.60 pretty quickly.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

I'm long from 63.87 with a stop just below the shoulder region at 63.10.

Hello All.
I am new to this trading thing and some very serious financial issues bring me to it.
I got a loan in USD to pay for a property in AUD which was converted at about 0.80 so am now in big trouble and want to get out of it as cost effective as possible. as you can imagine 0.20 cents in the dollar on a decent sized home loan is a fair amount of money that has just disappeared

How do you open a trading account and with who in australia?
does anyone think the aud will get back up to near 0.80 eventually?
is there currency trading companies like there is stockbrokers?

I like all the info on this site but a lot of it is difficult to understand at this stage although I am learning fast.
picked up on the upside down head and shoulders pretty quickly but have no idea where the hammer is.

thanks

You need to make an exchange for a practical purpose and not for speculative purposes. Therefore, I would recommend that you don't open a Forex account because you will be trading on high leverage and any account you open could be margin called (wiped out) due to its relatively small size as you try to hedge your mortgage exposure.

Speak to a few large banks in your area and see if they have any products that would operate like a 'interest rate swap' for your account size. They should know what this is. Realistically, I would suggest transferring your loan from the US to Australia as you will expose yourself to significant volatility in the exchange rate over the life of the mortgage (so you will keep running into the same problem of periods where your payments will far bigger).

As for reaching 0.80, that is probable - especially over the life of your loan considering it has the life of a traditional mortgage.Know ahead of time what exchange rate you could consider favorable and what would be your bare minimum and exchange you loan or fix a swap when it hits either of these (this will keep you from letting emotions get the best of you and keeping your hands tied if the rate continues to go against you).

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Something has to give in AUDUSD. Like many of the other majors, this pair has worked its way into the dying days of a significant wedge.

Dominant trend (the past four months' activity) is still bearish. The rising trendline from the October bullish reversal is modest at best and 0.64/6350 is a nearby trigger for declines down to 0.60.

However, we get a move above the 100-bar SMA, 200-bar SMA, major falling trendline and confluence of fibs up around 0.6600/50, it would likely be a surprise for the market.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

G'day John - Watching closely today & your AUD/Usd chart appears to have resolved to the downside about three hours ago, which may take it near the October low. Looking for correlation with the NZD/Usd decline, but that pair appears to be on a course to break through the Oct. low to possibly as low as high 0.40's this time. Your thoughts?

It looks like NZDUSD has indeed followed suit. From a technical perspective, I would say the drop below support in NZDUSD is more significant than that of AUDUSD.

I'm cautiously skeptical on where we go from here though. Look at what happened with the EURUSD false upside breakout yesterday and the USDJPY downside breakout today.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com