AUDUSD—correcting

AUDUSD reached a low of 9833 last Thursday and is enjoying a bit of a zigzag correction. This could carry it to .9945 or .9988. The high so far this morning has been .9931.

I'm short in the pair and unless it gets above 1.0077 (last Thursday's high) shorting seems the way to go. Possible targets are .9740, .9490, .9213 and below.

However, and it's a big however, this pair is like one of those plastic dolls you punch and it bounces right back. Aussie is still in a long-term uptrend until proven otherwise. This means stops must be tight and reversing on a break might be reasonable.

The break of the daily uptrend line from last May was a hint, not a certainty. Last week's candle was a doji whose upper shadow is potentially bearish. The week ended with a higher high (by 57 pips) and higher low (by 12 pips) from the prior week. The close was .9896 versus the prior week close of .9888, both down from the first week of the year.

Besides the 1.0077 high, the other four closes last week were at or below 9951. The break from the daily downtrend line was at .9962 and just above that is fib confluence. So resistance remains in the .9900 area and then 1.0077 and 1.0183, 1.0214, and 1.0257. Support is at .9916, .9804, .9690, .9612 and .9544/32.

© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

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