A few years ago, every fund manager was bullish on the Australian dollar. They couldn't get enough of it. Unfortunately, they were paying the wrong price -- above U.S. .80 cents to buy it. Now, however, the Australian dollar is largely scorned -- even though it recently fell to a new all-time low, and has recently started to act a bit better technically.

Occasionally, when we view a chart pattern, it reminds us of another chart pattern, and so it is with the current look and feel of the long-term chart of the Australian dollar pictured on the right below. To us, this chart pattern looks ever so similar to the way the Nikkei looked a few years ago on its way to a solid bounce into mid-22,000s -- albeit not having yet formed its definitive bottom.

Chart produced using Advanced GET End-of-Day

If the Australian dollar were to now follow a similar path, a dramatic blast-off now could still be followed by new lows down the road. This would be consistent with our current view of the gold market (often closely correlated to the Australian dollar) that calls for a typical late-cycle rally in that metal now, but a more important and lasting low next year (Subscribe to "Cyclical Commodity Turns" for more details).

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.