In what I would consider a bit of an uncharacteristic run-up, the AUD has now taken out the 200 SMA on the daily chart. Why is this important?

Well, the 200 SMA is what I use to determine the long-term trend. The fact that we have now nudged our way back into bull territory is telling. Last time we did that we ran all the way up to the 80’s.

This time around we do have a bit of resistance at the current 0.7700-0.7750 area, but as you know when trends begin in forex markets they can run.

With that in mind, I think we need to take a wait and see approach. If we can hold above the 200 then we have the potential for further upside. I’m betting on a decline and a sell-off. But perhaps that won’t happen until the new year, given the lower than usual volumes over the holidays.