Beware of a possible "bulls trap" ahead!Suddenly we're now above the major resistance of 0.7385. At least to me this was quite unexpected, since I somehow fixed my mind on a possible move to the downside. But I should have been more careful and should have noticed these two things:
1. Momentum indicators were clearly pointing higher.
2. Gold price made a new high, which is important for Australian economy and for its currency as a consequence.
Still I do believe this bullish move is about to end soon and bring reversal. Here's why:
1. The RBA sees its "ideal rate" at around 0.65.
2. There is a room to the downside: we have a trend line starting back at 2001 to support the price once it gets there.
3. From technical perspective, to call this move an uptrend, we still need to see a move down, which will not be able to go pass the previous lows at around 0.68 and then a move back through current highs. In other words, we need to be able to properly draw an uptrend line. And we are not able to do so quite yet.
4. I'm bullish on U.S. Dollar in the long term. Whatever Fed tells us on March 17 – it has to be positive for American currency.
This leaves us with a possibility for a larger reversal of all major currencies versus U.S. Dollar, as well as Gold and Oil, in the next couple of weeks.
So buy for the short-term, if you want to, but keep a possibility of a reversal in mind.
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Vladimir Vereshchak | Making People Wealthier!
