Trading from a thesis can be a great advantage, if it is correct. All traders have a thesis whether they know it or now. While they may not have articulated it, they have an internal believe system which has a powerful affect on how they trade. My own overriding thesis is identify a predominantly bullish (or bearish) market environment and buy dips and otherwise take buy signals (or sell rallies and otherwise take sell signals).  I also always focus on asset class markets because it is significant that they receive a regular bid based on production and business. No matter if business is slowing or growing the majority of companies will make their payroll, and it is the savings component of that regular flow of funds into global economies that insures a constant bid for asset class markets. In addition to the regular flow of income, interest, and earnings, there are times in the global business cycle where asset class markets shift momentum, and move from providing longs with not just the interest rate, or dividend they deliver, but rewarding them with an accelerated  appreciation of the asset itself, i.e.: rising prices.  Based on our analysis, AUDJPY, and AUDUSD are currently such markets.

This will be particularly interesting to currency traders because of the margin Forex markets provide. Experienced investors and traders will likely do well to monitor the Aussie pairs for price dips which could prove opportunities to either add to existing longs, or initiate new longs. An advantage for investors taking positions in these currencies rather than opting for precious metals and other commodities is the currency markets will be much less volatile than the commodities – definitely a major consideration for pension funds and retail investors — and that technically commodities are not asset class markets in that they do not earn interest – in fact there is a cost of carry to them – while  AUDUSD pays you interest in your Forex account, commodities do not; in fact unless you want to take physical delivery of a commodity and guard it yourself, you have to pay interest to store it.

Going forward we all may want to take a hard look at buying dips and otherwise taking buy signals in the Aussie pairs.                

To attend a live, interactive demonstration on how we use price to determine market direction on all time frames click on Directional Line Overview    

Jay Norris is host of The Daily Forex Report at Clovernest.com  and the author of Mastering the Currency Market, McGraw-Hill, 2009, and the soon to be released Mastering Trade Selection & Management, McGraw-Hill, 2011.

To win a $3,499 scholarship, courtesy of Trading University in Chicago click on:  Trading-U Scholarship

DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor!

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