Now suddenly traders have revelation that RBA can cut soon ! Well, that was always a possibility, wasn't it? With arguments about more collapse in commodity price combined with rate cut possibilities, AUD/USD
made two upward trips, one from 0.6800 to 0.7800 and another from 0.7100 to 0.77000, hasn't it? For Forex trading, rate equation matters more than anything else at the end of the day. So yes if RBA cuts then AUD/USD
may go down depending upon how deep the cut is. But the next day, market will look around and will find that even with less yield, it is offering much more than other are! And eventually all dips will be supported. Unless RBA wages war against AUD security holders and pushes AUD/USD
through bottom of the chart.
Anyway, in short term market will be jittery and if someone like to play it from the short side then it is ok. But we prefer to trade it with long bias because, once those who got it long at the wrong levels squeezed out, there won't be fresh selling pressure until RBA walk the talk and actually cuts. And as we mentioned in NZD/USD
trade earlier, that if everything else is equal, we will be waiting to buy that dip too !
So this reaction from 100 WMA
is normal and there is nothing to panic. These are the support levels we are interested to trade with long bias with a thought in mind that AUD/USD
can always go down below 0.7000, so keep the powder dry for long haul.