Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

AUDUSD Setting Up For Big Reversal

Currencies / Forex Trading Aug 11, 2014 - 04:21 PM GMT

By: Austin_Galt

Currencies The AUDUSD has lost a couple of cents over the last few weeks. So is this the beginning of the next leg down? I doubt it. On the contrary, I believe a big reversal higher is just around the corner. Let’s investigate.

First, let’s refresh ourselves of the big picture to help put it all in perspective.


YEARLY CHART

We can see the all time low set in 2001 at 47.78c. Since then price has risen up making a higher high in 2008 before reversing that same year and putting in a higher low. Then another rise saw a new all time high set in 2011 at $1.1079. So we have a massive bull market currently in play. Now we appear to be awaiting the next higher low.

I have added a Fibonacci Fan from the all time low to the 2008 high while I have also added Fibonacci retracement levels of the upleg from the 2008 low to the all time high.

Firstly, there seems to be some symmetry exhibited by the fan. We can see the 2008 low found support at the 76.4% angle. (This was also a near perfect 76.4% retracement from its 2008 high.) The 2009 high found resistance at the 23.6% angle. The 2010 low found support at the 50% angle. The 2012 high found resistance at the 23.6% angle and the low support at the 38.2% angle. And the 2014 high found resistance at the 50% angle. So, this Fibonacci Fan appears to be in-synch with the long term behaviour of the AUDUSD.

Interestingly, the 76.4% angle looks to intersect shortly with the 76.4% retracement level of the 2008 to 2011 uptrend. This level stands at 72.09c and is shown in the green highlighted circle. The intersection is set to take place in 2015. I’m zeroing in on this target for the final correctional low.

I have also had the 61.8% retracement level in mind. This stands at 79.48c. I will certainly be alert to any pattern of trading that alludes to a turning point there. However, at this stage I’m clearly favouring the 76.4%. There is another scenario that has crossed my mind. What is it?

This is the super bearish scenario and involves a retracement right back to the 2008 low at 60.13c. That is the level needed to break the massive bull market. I very much doubt price will break the 2008 low. But it wouldn’t surprise to see price pull up just short of that level, say around the 61c to 62c area. If price were to turn back up there, then a massive double bottom with the trend would be set which should produce an enormously powerful move higher. Something to keep in mind anyway.

I have added a Stochastic indicator which had a bearish crossover in 2013 and looks to have some more downside left in it.

Let’s move on to the monthly chart.

MONTHLY CHART

I have drawn a horizontal line which denotes the May low of 92.03c. This has been the low of the consolidation pattern that has been in play since April. I expect that low will hold the current move down. If it doesn’t then I suspect the next leg down will have begun. But I don’t favour this scenario. The June low at 92.29, however, may not be so lucky. It could be regarded as minor support with the May low being major support.

I favour this current move down to bust minor support at 92.29c and to be held by major support at 92.03c. So, what happens after that?

I have added Bollinger Bands and it can be seen price moved away from the lower band and just failed to hit the higher band. I favour price actually getting up and touching that higher band before the next major leg down commences. That higher band is currently situated just above the 96c level.

I have added a Moving Average Convergence Divergence (MACD) indicator and a Stochastic indicator. Both appear to be trending up with no bearish crossovers set to happen this month. So these indicators seem to support higher prices.

That’s the big picture done. Now let’s wrap it up by looking at the small picture – the daily chart.

DAILY CHART

I have added Fibonacci retracement levels of the move down from the October 2013 high to the recent lower low at 86.6c. It can be seen that the current rally high was pretty much a direct hit on the 76.4% level. That is some evidence that the rally has already ended. But I don’t think so. Why not?

The trading still looks corrective in nature. I just don’t see any really impulsive action taking place. I have also added a Relative Strength Indicator (RSI) and Stochastic indicator and both are showing little bullish divergences on the last couple of lows. So I favour one final high to end the corrective rally that has been in force since the January 2014 low.

As the 76.4% level has already been used up, I have added the rarely used 88.6% level which stands at 96.31c. I am targeting this level for my next big play short opportunity. A break above the October 2013 high of 97.56 would most likely mean the bears have been fatally gored. Unlikely in my opinion.

So, as it stands today, the AUDUSD appears on the verge of a big reversal back up any day now. That should lead to one final rally high before the resumption of the main trend – the bear trend.

Bio
I have studied charts for over 20 years and currently am a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts there seemed to be a dearth of technical analysts, at least ones that had a reasonable idea of things. So my aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Please register your interest in my website coming soon. Any questions or suggestions, please contact austingalt@hotmail.com

© 2014 Copyright  Austin Galt - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules