The Comdols Tanked apon Donald Trump’s “shocked” victory on the 9th of November. Trumps policies are very Pro American which in long term, will have an effect on commodity based currencies. This affecting particularly Australia with having a close economic trade relationship with China. Initially the USD sold off while Trump was leading the election but was quickly bought back a few hours later once Trump’s victory confirmed.
A lot of analysts were betting a USD landslide on a Trump victory but was more of media hype to get last minute Clinton votes. Trumps policies are very Pro America and if he does what he has promoted in his campaigns America’s economy may once again boom. Trump wants to bring back American jobs and rip up current free trade agreements. Slow down the imports of Japanese and Chinese products and re-ignite American manufacturing.
Australia’s economy is heavily based on suppling China and Japan with raw matériels, Iron Ore and Cocking Coal being the main source of income. Already Australia’s economy has felt the China slow down and could end up in a recession if China’s growth slows even more than the current rate.
We will start here on the weekly time frame and the symmetrical triangle I have been talking about for the past few weeks. The upper triangle resistance was breeched for the third time this week. Having the first false break out on the 19th of October and recently two days before US election. Shown on the daily chart. On every consultative weekly candle, price has been rejecting off the upper triangle resistance and closing under. This was telling me plenty of sellers keen at these levels.
Friday’s close is very significant as its the first time it has compromised and closed below the triangle support. Weekly candle closed as a bearish engulfing candle. The current week ending candle is also an outside bar which engulfs the the previous 3 candles. This has been accompanied with a mass increase in volume. I previously indicated to look out for this in a prior post. The RSI shows a class A divergence.
Fundamentally there is nothing to drive the Aussie to the upside. The recent rallies of commodities has been keeping some strength in the AUD. The current price trend of Iron Ore remains uncertain. The Australian dollar also is supported by copper and about mid October 2016 copper sky rocketed over the past few weeks. However it has been heavily rejected at 2.7300 and closing out at 2.5067 which was a former support level now become resistance.
What is interesting and relates to the above analysis, copper closed out on Friday with an engulfing outside bar . The previous day closed as a top pinbar and what appears to be an exhaustion gap up. Copper’s price action looks to be a pump and dump, and may bead back down to around the 2.2800 support level.
AUD/USD approach remains sell on the highs and pullbacks.