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Forex pairs in this Article » AUD/USD
By: DailyForex.com

The AUD/USD pair has been falling drastically for the last two months, and as a result it takes a certain amount of wherewithal to start buying it in this general vicinity. Even though I see significant amounts of support just below, and the week before Christmas formed a nice hammer at the bottom of this run, I think that any bounce from here is simply going to end up being a nice selling opportunity. However, there is the possibility of taking advantage of Australian dollar strength in other currency pairs.

A lot of people tend to forget that Forex trading is simply buying the stronger of the two currencies. It really is that simple, and people tend overanalyzing overthink the situation. So in a situation like this, by far I believe the best opportunity to own the Australian dollar is not against the US dollar which is obviously so much stronger, but against another currency that is obviously so much weaker.

You can look for opportunities against the Canadian dollar, or perhaps even better - the Japanese yen. After all, everybody is trying to sell the Yen right now, so if the Australian dollar gets any type of strength to it at all, it will appear against that currency much more drastically than it will against US dollar.

Short-term opportunity only.

In my opinion, if this market managed to call back above the 0.90 handle, we are probably looking at a move to about 0.92 or so before the sellers really start to take back over. With that being the case, I think it’s only a short-term opportunity and there’s more room to move against those other currencies. In fact, you could even go countertrend against the British pound, as it is so overextended at the moment.

However, we could continue the move lower. If we break the bottom of the hammer that formed right before Christmas, this pair will go down to the 0.85 handle. Quite frankly, we can go as low as 0.80 as it was the site of such a massive break out to the upside a few years ago. This will be an interesting month for the Australian dollar, and as a result I suggest looking at this chart, and trading the Aussie somewhere else - unless of course it continues to selloff. If it continues to selloff, you could probably sell this currency against just about anything.

AUDUSD Week 122413

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