Today we will take a look at the Australian dollar and China. We will begin with the Australian dollar.
This is what a weekly chart looks like:
Figure 1. Chart of the ETF FXA representing the Australian Dollar in US dollar terms. 50-week moving average is represented in blue and 100-week moving average is in white. Chart: FreeStockCharts
What we see here is a bottoming pattern where the 50-week moving average is slowly changing direction. When it comes to the 100-week moving average, it is still declining but because the prices have managed to climb above it, it will in due time also be flattening out.
The Australian dollar being a commodity currency, it naturally benefits from higher commodity prices. In that sense a stronger Australian dollar is completely logical at this point.
If we then look at the Chinese market we will see some very interesting developments. This is what a weekly chart looks like:
Figure 2. Chart of the ETF FXI representing the Shanghai Stock Exchange Index. 50-week moving average is represented in blue and 100-week moving average is in white. Chart: FreeStockCharts
What we see here is that the chart is trading within a range and that it managed to break out of this range in early 2015 but that it did not manage to stay above it. As often, the moves after a false break out can often be violent as we saw for the most of the remainder of 2015. We then broke down below the support line, but prices did not stay there. Instead they shot higher and now we between the 100-week and the 50-week moving averages.
From the chart it looks as though the 100-week moving average is acting as resistance and it will be very interesting to see how this plays out.
The post The Australian dollar and China appeared first on LJ Nissen's blog.
