Weekly Forex Update: AUD/USD

The uptrend on the daily time frame of the AUD/USD has corrected lower. Selling pressure built at the 0.9200 level sending the pair lower in what could be considered part profit taking, and part over extension from a four week rally. The current market direction on the AUD/USD shows the bulls are pausing at the front of a week of potential high impact data. This will start today with the Reserve Bank of Australia Meeting Minutes' release. This important event could set the tone for the remainder of the week.

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If the breakout through resistance on the 240-minute's Channel Down pattern alert is any indication of the next leg of the AUD/USD, the bulls are ready to resume the daily chart uptrend. The rally through the 0.8940 (E) level has triggered an Autochartist Reversal of the Trend (ART) entry long. The trend on the 240-minute chart is down and confirmed by the seven-bar Initial Trend reading. While seven bars do indicate a trend, it's not strong, and therefore a reversal higher could have the momentum needed to start shifting the negative sentiment.

The Autochartist Breakout indicator reflects the strong bullish momentum with which the pattern reversed and is excellent confirmation of the near term market sentiment. The 240-minute AUD/USD is positioned to make a rally to the Forecast resistance waiting between 0.9062 and 0.9185 (F).

Weekly Index Update: US SPX500

While the daily chart of the US SPX500 continues to trade within a wide and volatile range of a distribution market cycle, there are some early signs that the daily has once again found the bottom of the range and is ready to rally higher. This potential reversal can be taken by watching for a floor, however, a more prudent confirmation would be to wait for momentum higher.

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The intraday, 240-minute time frame is indicating that the bullish momentum off the 1069.5 Monday session low could be attracting enough buyers to carry the US SPX500 through the downtrend line resistance of the Channel Down formation. The entry trigger is currently 1080 (A). Should the bulls find the momentum necessary to trade through the downtrend line and reverse the 240-minute downtrend, an Autochartist Reversal of the Trend (ART) will be confirmed. As the Initial Trend reading is just one bar at present, it would be good to wait for momentum since there is sufficient confirmation that the trend on the 240-minute time frame has transitioned into a sideways market cycle. The downtrend line resistance of the Channel Down is the decision level for the entry long. A six bar or greater Breakout reading would offer strong support for follow-through higher.

While Channel Down pattern alerts would generally be considered Continuation patterns as seen by the Trend Change there is no confirmation that the downtrend is still the dominant market direction. This pattern is ideally suited to capitalize on a surge of upward, corrective momentum. However, do not ignore the fact that exhaustion at the 1080 level could reinvigorate the bears and allow for a move lower towards pattern support at 1050.

Weekly Commodities Update: Silver

The congestion on the daily chart of Silver has found a range between 1870 and 1734. Prices are currently favoring the top half of the range and therefore the downtrend line resistance comes into play for a potential breakout. The Descending Triangle pattern on the daily chart has taken nearly two months to form, making it a large enough formation to trigger a market reaction. It's important for pattern Length to be taken into consideration when gauging the amount of expected follow-through, should the support or resistance level be broken. As a general rule, smaller patterns when broken will not carry as much market sentiment or momentum.

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The daily chart of Silver is still trading within a wide range as the Triangle pattern slowly narrows. Triangles are self-limiting patterns.  This means that if price action were to do nothing more than move sideways the pattern would eventually be broken as the range tightens. The slight favoritism for the breakout higher is due to the fact that Triangles are often continuation patterns.  The preceding trend was up on the daily chart before the consolidation started, and the intraday time frames are moving higher with bullish momentum.

A break higher through 1854.4 (X) would trigger an Autochartist Initial Movement/Momentum entry long which would be strengthened by a six bar or greater reading of the Breakout indicator.

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