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Good morning. In 1971, the NASDAQ became the world’s first electronic stock exchange. Unlike the NYSE’s trading floor chaos, NASDAQ was completely digital from day one.
It was the start of the screen-based trading era we live in today.
-Jonathan Kibbler, Shaun A, Jordon Mellor
MARKETS
How’s your favorite today?
Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.
TRADER INSIGHTS
Everyone’s Short AUD... Here’s Why That Could Backfire!
The Australian dollar has been getting weaker due to the central bank cutting rates and cutting future growth forecasts, but now positioning hints that hedge funds have reached an extreme short position.
If you’re not familiar, when traders are leaning heavily in one direction, it can lead to some sharp reversals.
The Macro In Short
The Aussie dollar has been hammered lately, and for good reason.
The RBA cut rates last week, taking the cash rate down to 3.6% from 3.85%.
Growth forecasts were downgraded by the RBA from 2.1% to 1.7% for the full year of 2025.
Inflation has cooled to 1.9% y/y down from 2.1%, giving the central bank more reasons to cut interest rates.
All of that weighed on the Aussie dollar, while the ASX got a relief rally. The textbook says: lower rates = weaker AUD… and that’s exactly what we saw.
But will it continue?
Looking at the Commitment of Traders (CoT) reports, non-commercials are holding extreme short positions in AUD.
We’re talking levels far greater than what we saw in August.
It’s now approaching the extreme positioning from April 2024, and back then, that marked a turning point.
When everyone is loaded up on one side of the trade, risk-reward often flips. If shorts start reducing, the squeeze can be aggressive.
Trading angle (not advice, just my view)
For me, I’m looking at AUD/CHF for signs of reversal.
The price of AUD/CHF has been in a constant downtrend, at least that’s the way it’s been since I started trading in 2017.
At the moment the price is trading below the 50 moving average, and is heading lower towards 0.5175. A break of this level could see the price fall towards the April 2025 lows of 0.5025.
However, if the reversal forms, we would need to see the price reject these support points, and even break through resistance, such as the trendline that formed on the highs in May.
Some seasonal backing
I thought I would go take a look at the seasonals of the AUD/CHF market too just to see if there was any confluence around this time of year.
This is what I found:
Over the last 20 years, AUD/CHF has rallied between 21st August and 19th September with a 73.68% win rate.
This pattern has been successful 8 times over the last 10 years, adding some recency validity to this pattern.
So it looks like it to me that there are some variables that could suggest an Aussie dollar rally could form. As with all of the posts, please do your own research and due diligence.
Speak soon!
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LEARN
The One Tool That Simplifies Forex Pair Selection
If you’ve been trading long enough, you’ve probably stared at multiple charts trying to figure out which pair is worth your time. One looks bullish, another looks bearish, and you’re left guessing which direction to trade.
That’s where the Currency Strength Meter comes in. Instead of flipping through endless charts, the CSM gives you a quick snapshot of which currencies are strong and which are weak. Pair a strong one against a weak one, and suddenly the picture becomes a lot clearer.
Sounds easy, right? Just buy strength and sell weakness. Reality check: it’s not always that simple. But when you know how to read CSM properly, it becomes a game-changing tool for filtering trades and timing entries.
Here’s what you need to know about CSI:
1. What Exactly Is the Currency Strength Meter?
The CSM measures how strong or weak a currency is against a basket of others. Think of it like a “power ranking” for currencies. If the euro is climbing while the yen is tanking, you’ll see it immediately on the CSM.
It’s a relative measure, not absolute, it compares currencies against each other, not in isolation.
2. Why Do SomeTraders Obsess Over It?
Because it cuts through the noise. Instead of watching EUR/USD, GBP/USD, and AUD/USD separately, the CSM tells you in seconds which currency is driving moves.
Strong vs. weak pairings often lead to the cleanest trends, which means less guessing and more conviction in your setups.
3. The Catch: It’s Not a Standalone Signal
The CSM won’t tell you the exact entry or exit point. It also doesn’t predict when momentum will flip.
What it does do is point you toward pairs worth watching. From there, you still need technical analysis, economic context, or sentiment to build the full trade.
4. How Traders Use It
Smart traders don’t just look at “who’s strong, who’s weak.” They dig deeper:
Trend confirmation: If EUR is strong and USD is weak, EUR/USD rallies make more sense.
Trade filtering: CSM helps cut out pairs with no clear direction.
Sentiment check: Extreme readings can warn you of overextended moves.
Timing tool: Combining CSM with support/resistance levels can refine entries.
5. Is It the Best Forex Tool?
On its own, no. But as part of your toolkit, it’s one of the simplest ways to gain clarity. The CSM is most powerful when paired with fundamentals and technicals, like knowing the Fed is dovish while the eurozone is strengthening.
That combination gives you both the “why” and the “when.”
Here’s the Takeaway
The CSM isn’t a magic bullet, but it’s a map of money flow. Ignore it, and you’ll waste time on dead pairs. Use it wisely, and you’ll quickly spot where strength meets weakness, often the birthplace of the cleanest forex trends.
The best traders don’t just follow charts, they follow flow. CSM helps you do exactly that.
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