By: Mike Kulej
Currencies are in very strong trends, with the US Dollar falling sharply. It has broken through the parity level with the Swiss Franc and now seems destined to repeat it against “the other dollars”.
Both the Australian Dollar and the Canadian Dollar are rapidly approaching parity with the green buck. The Aussie is almost there, with the rate at 0.9965 as of this writing. Given how strong the trend has been so far, its speed and sharp slope of the rally, it seems only a matter of time, before the magic number is reached.
However, what then? What can be expected when/if that happens? Forecasting markets in an all time high/low territory is notoriously tricky. There are no past support and resistance levels to use as guides. Furthermore, a price movement at such levels is often very emotional.
A parity level between major currencies, like the AUD-USD, is an extreme psychological obstacle, at which anything can happen. Many technical indicators are in at overbought levels, (RSI, Stochastics) yet the trend does not want to reverse. In fact, it appears to be gaining momentum. This might be tested at the parity, when plenty of players will be deciding their next move.