From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
The unwind is on in the aussie!
After accumulating a historic net-long position last fall, commercial hedgers are scrambling to cover. Over the past four weeks, the smart money has trimmed its long exposure to roughly half of what it was.
This is reflected in our most recent Commitment of Traders Heatmap, which you can view here.
When positioning flips at extremes – like we’re seeing now in the Australian dollar – we want to look for opportunities to ride the emerging trend. In other words, we want to bet in the direction that commercial hedgers are currently unwinding away from.
In the case of AUD, they recently had a historic net long position. As such, we’re looking for bullish technical characteristics to see if a long setup makes sense here.
It just so happens that things are really coming together for the aussie chart lately. We love when technicals and sentiment line up like this.