Daily Technical Briefing: AUDUSD Clear Short Term Bearish

OpportunityTechnical Overview
  • Euro Short Term Pattern Unclear
  • Japanese Yen In Small Correction
  • British Pound Drop Below 2.0276 Negates Bullish Bias
  • Swiss Franc Towards 1.1900
  • Canadian Dollar Already Turned?
  • Australian Dollar Bearish Bias Confirmed
  • New Zealand Should Come Under .7500


Commentary: We have been stating that "bigger picture, we expect at least a return to 1.3828 (former 4th wave) and possibly 1.3712 (61.8% of 1.3360-1.4281) over the next 3 to 4 weeks." Stubbornly though, we have held on to a bullish bias and been proven wrong twice in the last two trading days. The short term count has not been especially clear. The latest decline from 1.4157 is an impulse but could be wave c in an a-b-c decline from 1.4281. Another possibility is that the decline from 1.4157 is the beginning of a 3rd wave lower. If this is the case, then the decline could accelerate, and soon. With this in mind, a cautious bearish bias is warranted against 1.4157. Short term resistance is at 1.4060. We are showing the bearish count today.

Strategy: Flat


Commentary: 118.00 (118.12 is the 100% ext. of 111.59-117.12/112.59) has been a level that we expect the USDJPY to challenge before a major reversal. We still expect a rally to at least this level prior to a reversal. Recent weakness is viewed as a consolidation/correction in a 4th wave. There is the potential for weakness to 116.27 before a 5th wave rally occurs.

Strategy: Move to flat from bullish (short term traders may want to trade from the short side…against 117.60…targeting 116.20/50)


Commentary: It is still possible that a double zigzag is unfolding from 1.9879 (in which case price will exceed 2.0494 before a reversal) but it is also possible that an intermediate term top is in place at 2.0494. Bigger picture, everything from 2.0654 is part of a larger correction such as a triangle or a flat so a return to at least 2.0000 is likely in the next few weeks.

Strategy: Flat


Commentary: The USDCHF is playing out as expected. We wrote yesterday that "the short term trend is up and there is potential for a test of former resistance at 1.1922." The pair tested 1.1894 this morning so longs should keep risk tight as the pair approaches potential resistance. 1.1920/30 is defended by the the 100% extension of 1.1623-1.1814/1.1738 at 1.1929. The next level of potential resistance is the 161.8% extension at 1.2047. A new long (beneath 1.1623) remains very much a possibility as long as price is below 1.1960 since the rally from 1.1623 could be a 4th wave. Until 1.1960 is taken out, bulls should refrain from acting too aggressively.

Strategy: Remain bullish, against 1.1738, target 1.1920


Commentary: The rally from the low (.9784) has carried a bit more than expected for a small 4th wave. With this in mind, the possibility that a rather significant low is in place at .9748 needs to be considered. The correction that occurred before the drop from just above 1.0000 may have been a running triangle in the 4th wave position. If this is the case, then it is possible to count 5 waves down from 1.0002, which is enough evidence to say that the terminal thrust from the triangle is complete. Additionally, the rally from low can be counted as an impulse (shown on the 15 minute today). A setback in 3 waves would warrant a bullish bias against .9784.

Strategy: Flat


Commentary: We wrote yesterday that "with the rally stalling at the .9000 figure and with 9 waves up from .8051 (see last week's analysis for more on this), the probability of a reversal is high. We will wait for evidence (small 5 down) to confirm our bearish bias." Our bias is confirmed with the decline from .9032 proving impulsive. Near term resistance is at the 61.8% of .9032-.8917 at .8988. A rally to there would complete either wave 2 or b and lead to a larger decline.

Strategy: Look to get bearish following a rally through .8966, against


Commentary: There is no change to the Kiwi (the pattern is not as clear as the AUDUSD pattern). "With 5 waves already up from .6824, the decline from .7668 could be wave a of a larger correction, likely a flat. b waves in flats often test the origin of wave a and it is not uncommon for the b wave to exceed the origin of a." After briefly trading above .7668, it is our contention that price is rolling over in wave c that should come under .7501.

Strategy: Flat

By: DailyFX

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