One of the Strongest Buy Signals I’ve Seen This Year: The Australian Dollar

An exciting buy signal showed up on my screens this week – the Australian dollar. It broke out to new highs and could easily see 20% gains from here.

My good friend Dr. Steve Sjuggerud taught me to look for investments that are cheap, hated and in an uptrend. It’s a philosophy I’ve embraced wholeheartedly … and today the Australian dollar checks all three boxes.

Here’s the latest TradeStops Stock State Indicator (SSI) chart on the Australian Dollar ETF (FXA):

You can see in the chart above that the Australian dollar triggered a new SSI Entry signal back in early 2016. So why am I just writing about it excitedly this week?

Because of the recent strong surge up and out of a nearly three year trading range between $70 and $77. I love it when I see a stock trigger a new SSI Entry signal, dip in and out of the Yellow Zone but not get stopped out and then head solidly higher. It’s a powerful signal.

You can see the breakout very clearly on this volume-at-price (VAP) chart of FXA as well.

There’s not much stopping AUD from moving solidly higher from here. The next serious overhead resistance is around $88.

The time-cycles on AUD are supportive of higher prices through the rest of this year too.

Finally, I’m bullish on AUD in part because I continue to be bearish on the US Dollar. In December of last year we called for a top in the US Dollar “in the next 30 days.” We nailed it. The US Dollar peaked about 15 days later and it’s been downhill ever since.

Here’s the latest TradeStops SSI chart on USD. It’s solidly in the Red Zone.

And the time-cycles on USD suggest that we aren’t likely to see the US dollar get up off the mat before the end of this year.

Australia has commodity-sensitive economy. It exports a lot of iron ore and coal to Asia. Both commodities have been rising in price this year as well.

It’s also wintertime over there right now. I just checked the weather in Melbourne. It’s partly cloudy with a high of 55 degrees Fahrenheit. Sounds pretty nice compared to sunny and humid Florida.

It might be a good time to head to the land down under before the temperature – and the currency – start heating up.