Forex Technical Update

Prev: AUD/USD Attemping a Double Top with 1.10 Support (7/28)

AUD/USD 8/2/2011 4H chart
Double Top Attempt:

- The AUD/USD is seen in the 4H chart break below a double top with support near the 1.0920 area. Note the left top also being a double top, which we caught last week.
- The current double top is a big more significant as it pushes the market below our 1.0876 support near 38.2% retracement. A dovish RBA statement may have contributed Aussie strength being contained starting in the Asian session to start the week.
- The next level of support near 1.0790 and the 50% retraecment is very critical to maintain the bullish stance.
- However, the RSI reading also hints are the market being range-bound instead. But that does not mean we can't have a bullish or bearish tilt. A break below 1.0790 however takes away the bullish tilt.
- In this scenario, the market can extend the decline in the context of a sideways action, where 1.0440 is the support area.
Wave Count:
The 4H chart shows a bullish motive wave that may not be complete. The structure appears to be a nested bullish wave. The ultimate invalidation of the count is a break below wave (1) pivot at 1.0740, which is also near 61.8% retracement.
- Otherwise, we have at least another wave up to complete wave 3, then wave 4 and 5 to complete a full motive wave up.
- Looking at the daily chart, it appears that we COULD be done with an abc rally rally and broke 1.1010 high. In the context of a expanded flat correction, the market is bearish towards or below 1.0440 in a larger wave C.
- In the medium term however, if the market remains above 1.0790 and break further higher above the most recent high at 1.1075, we are looking at a 1.1590 breakout projection, and 1.1690 swing projection.
AUD/USD 8/2/2011

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Fan Yang CMT
Chief Technical Strategist