Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Where Is The Australian Dollar Going Next Week?

|Includes:CurrencyShares Australian Dollar Trust ETF (FXA)

The Australian Dollar is in a bottoming process which should continue next week. In my last article that you can find here, I explained how the Sept. Aussie Dollar should seasonally rally from June 1st to July 26th according to Moore Research. I know it will be difficult to get the Aussie to rally all the way back up to turn a nearly $7,000 loser this year into a winner. But we should still rally over the next couple weeks and cut the loss on the seasonal trade down several thousand dollars. I bought again when the Aussie made new lows at 9050 and 9000 late last week and I was able to sell out at 9098 and 9125. After hitting a low of 9087 one expects a rally of 135 to 165 points and the move to 9134 before Friday's NFP (Non-farm payroll) report was a rally of 147 points off the low. I got completely out as I was afraid the payroll numbers would be strong and the Aussie would sell off. I was very happy to buy several dips following the report and eventually made over a dozen trades buying 9005 to 9015 and getting out 9018 to 9025. I remain long a few contracts over the weekend, based on the weekly chart that you will see below:

(click to enlarge)Sept Aussie Weekly ChartClick to enlarge

Here is a weekly chart to look at:

You will see from the above weekly chart, that we are down 8 of the last 9 weeks in the Sept. Aussie Dollar. Not only are we overdue for an up week, but if you went long the last several down week Fridays on the close, there was a significant rally to let you out the following week. Last Friday, June 28th, you would have bought in at 9107, and we rallied to 9200 this week to let you out before falling lower again. The week before that we closed on June 21nd at 9190, only to rally to 9289 the following week to let you out again, before falling lower. Even the strong Friday close of June 14th of 9537 let you out the following week at 9579, but of course you would have never gone long on the Friday of that strong rally week. Friday close on June 7th of 9434, let you out at 9593 the following week. Friday close on May31st of 9502, let you out the following week at 9719. In summary, buying on the last several down Fridays resulted in rallies the following week of 93, 99, 159, and 217 points counting backwards. You can see that the rallies are getting smaller and harder to come by. Like a coiled spring, one of these upcoming Fridays should result in a rally of 200, 300, or 400 points the following week. I am hopeful we make a marginal new low down to 89.50 or 89.00 (both points that I will be adding as they would be new low buy points) early next week. Then if we could get a rally back through 9150, the bottom will be in and we will have a temporary top in the dollar, so a big rally move to 9300 to 9400 could occur the following week, cutting the loss in the bullish seasonal that ends July 26th.

A great site to check out is daytradingbias.com that you can click on here. Save it in your favorites list and look at it on the weekends to see the potential trading parameters of the following week.

Stocks: FXA