Tools:
Simple Moving Average(SMA) 50-period (red), 200-period (bold, gray
RSI-14 with Simple Moving Average 5-period of RSI attached.
Fibonacci Study
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)

We start with EUR/AUD, which was closely monitored. We also see the Aussie fight back a bit in the AUD/USD and AUD/NZD.
EUR/AUD
EUR/AUD

  • 4H and 1H: We finally get a strong bearish signal in the 4H chart, and this time, the market does confirm the bearish attempt. (The 15-min RSI, not shown here, finally dipped below 30.
  • Looking at the 1H chart, we want to see the RSI dip below 40, and price below 1.3115. Price action is doing its job, testing the 1.3115 level as well as cracking the rising support. We should be heading lower at least to e.13060. A break below 1.3040 should target 1.2930.
  • However, if the market is still bullish, it should find a bottom near 1.3050 for another impulse wave to build up.
  • In the near-term the 1.3115-1.3100 area might provide a bit of support for a quick bounce. If the market then reaches 1.3130 without accelerating, we could probably find a top for another swing lower towards 1.3060.
  • Against the euro, the Aussie is neutral in the intermediate term as you can see in the 4H chart. There is a bearish bias, but the market has gotten into sideways action. The target on the downside therefore, should not be under 1.2930.

AUD/USD
AUD/USD

  • 4H and 1H: AUD/USD may have completed a corrective rally. If the bearish mode is to continue, there should be topping here at 0.9925 as the RSI in the 1H chart tests 60 again.
  • The RSI in the 4H chart resolved oversold conditions after a bullish divergence, but now is forming another negative reversal. There is a negative reversal seen in the 1H chart too, suggesting a swing towards 0.9750 which has been our target since the market broke back below parity.
  • This week, we saw the market inch lower and lower, but the AUD/USD found reprieve yesterday and over night into the European session.
  • The decline from 0.9925 has found support at 0.9880. A break below this is needed for a bearish outlook to open up.
  • Then there is the 0.9860 (50% retracement) level which is also a minor resistance pivot. If the market can break below this pivot, it takes away the bullish impulse wave scenario, and the bearish outlook improves.
  • A break below 0.9850 (61.8% retracement) makes the case very strong.
  • At the moment, the market is still supported above 0.9880, so the Aussie's corrective rally might not be done. There are not enough clues yet to suggest the bearish continuation. We must wait because there is a chance the AUD/USD can develop bullish impulse waves and continue the run up we saw in 2010.

AUD/NZD
AUD/NZD

  • 4H and 1H: AUD/NZD rallied from yesteray's bullish divergence seen in the 1H chart. This rally is seen at 50% retracement level in the 1H chart.
  • The rally now is testing declining resistance seen in the 4H chart.
  • IF not for the strength in the bullish action, this would be a logical area for the market to find topping. Let's see if it will top below 1.3100, because if it does another bearish swing is imminent.
  • However, if the market rallies above 1.3100, we maybe we may be looking at a rally to extend to 1.3200-1.3210, previous pivot high, and 50% retracement seen in the 4H chart.
  • There is a bullish divergence in the 4H chart too, so AUD/NZD looks to probably extend this correction rally. We might even have to start considering a return to the bullish trend.

Has the all in Aussie been just a correction? Will it regain strength against its neighbor currency as well as the EUR and USD? We would love to hear from you.

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Fan Yang CMT
Chief Technical Strategist
FXTimes

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

EUR/CAD 12/10/2010