Treasure Chest | Jul 02 2013
By Greg Peel
The Aussie dollar peaked at US$1.0624 in September last year and was last above 10500 in April. On Friday night the currency hit a low at US$0.9116 before rebounding to back over 9200 last night. The correction represents some 12%.
ANZ Bank analysts suggested yesterday a bounce above the 9215-25 range would be enough to turn the current trend (trading over 9230 at time of writing) while a close above 9300 is needed to trigger an anticipated period of corrective rebounds. ANZ believes that after such a substantial slide, rebounds are likely to be contained. the analysts' initial target is the 9430-60 range and thereafter potentially 9670-75.
The risk/reward balance has swung towards a short squeeze, ANZ suggests. Divergence appears acute on the charts but rebounds have remained contained to date. The analysts suggest the likely outcome is a series of rebounds rather than one single squeeze but they emphasise such rebounds would remain corrective only. Short positions can be re-established on the move up, ideally in the 9650-75 range.
ANZ believes it is difficult to assume anything other than a long term top is now in place. The sharpness and extent of the sell-off to a long term retracement level of 9140-50 does, nevertheless, open the currency up for a sharp squeeze, the analysts suggest. However the slide over the past 13 weeks has been impulsive and rebounds should thus be seen as selling opportunities.
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
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