By any reasonable technical analysis on the weekly chart, AUDUSD is still in an uptrend. One could argue that the pair recently completed an ABC correction with the drop from 1.1012 to 1.0537 being leg A, the rise to 1.0889 being B, and the slump to 1.0441 being almost the point at 1.0414 where C would equal A. If this were true, then one would expect price to resume rising and to surpass the 1.1012 high. I do have price targets up to 1.14. However, the pair is stumbling a bit in a resistance area.
From the 1.0441 low, Aussie has reached a high of 1.0757. On the daily chart, the picture appears corrective with a three-wave structure down to the 1.0441 price. This rise, then, would be wave B, a remnant of the former trend. The high so far of 1.0757 is near the monthly 1.0746 pivot calculation as well as near the .382 retracement of 1.0724 (1.0257/1.1012).
I had a sell order on the table that was filled Friday at 1.0725. I have moved the stop to breakeven. A more reasonable stop would be just above the recent high (1.0757) but I have been out of the market for a few days and need to get my bearings back. I can always short again if this one stops out. If price moves above 1.0889, I expect that would mean the larger trend is resuming. Note that there is positive divergence on the four-hour chart.
If the price breaks below 1.0607, the downtrend line beginning at 1.1012 on the four-hour chart, support is at 1.0567, 1.0441, and 1.0359.
Here is the four-hour chart:
© Dianne Fecteau, 2011. 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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