Forex Technical Update June 16, 2010 AUD/USD : Bearish Divergence May be a Bullish Signal
- 4H: Indeed the AUD/USD may be in wave 4′ as discussed in the previous AUD/USD update. The rally has topped off, an indication of wave 3′ completion. I can't be sure that wave 4′ has not already been complete, but most likely wave 4′ would be a complex pattern because wave 2′ was a simple one. This is not a rule, but just a tendency.
- The bearish divergence suggests a bearish attempt may be at hand, so we may have some decline or sideways action today.
- It may be possible that a subwave a and b has been complete and a wave c is upon us.
- This means the bearish divergence DOES suggest bearish action, but may be a clue to further bullish action if this bearish action is weak and does not break below the previous low near 0.85. This would develop a positive reversal setup.
- A wave 5′ can follow to finish wave (c). Then I will be looking for topping action and be prepared for an intermediate term decline.
Fan Yang Currency Analyst Commodity Trading Advisor
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