currency crosses

Australian Dollar Crosses Prepare to Break Out

Wednesday, 12 September 2007 15:44:12 GMT  |  Jamie Saettele, Technical Currency Strategist

AUDCAD
AUDJPY
AUDNZD

Commentary – The AUDCAD continues to trade sideways but we are still looking for a significant rally in the coming months.  The weekly chart analysis touches on this and can be found here AUDCAD. We wrote last week that “the rally from .8271-.8751 can be counted as 5 waves up and a 3 wave correction has followed, indicating that the larger degree trend is bullish.  The only question is whether or not the drop from .8752-.8588 is a complete correction or just the first leg of a more complex correction.”  It is clear now that the drop was the first leg of a more complex correction.  Look for a drop below .8572 and for a test of the 50%-61.8% of .8271-.8751 at .8511/.8454 and an opportunity to get bullish if not already so.

Strategy – Longer term bullish against .8119, target much higher (above .9514)

                                                                AUDJPY

Commentary – The AUDJPY remains in the correction that began at 85.98 on 8/17.  As mentioned last week, “everything that has occurred since the low (85.98) is large wave B.  Wave a of B ended at 97.01.  Wave b of B is underway now and will either be a flat or a triangle.  Both point lower near term but a triangle will be choppy and extremely difficult to trade.”  We know now that the pattern was a triangle and it should end in a terminal thrust that tops near the 61.8% of 107.70-85.98 at 99.41 or the 78.6% at 103.06 before the next leg lower (below 85.98).  Allow for some consolidation/pullback in wave e of the triangle before the thrust higher (as detailed on the chart).

Strategy – Bullish now, against 92.20, target 99.41 and 103.00

Commentary – We wrote last week that “price will continue higher and register a new high in a 5th wave (above 1.1762).  This would make 5 waves up from 1.0906 and give way to a larger correction.  The correction will offer an opportunity to get aggressively bullish for wave 3 higher.”  The pair broke to new highs and tested just above 1.2000 and the correction lower should be underway now.  A deep pullback to the 61.8% of 1.0906-1.2030 seems reasonable given that this pullback is a larger second wave.  Also, the 1.1331 is the former 4th wave and 8/17 reaction low.  Expect this corrective decline to take at least a few weeks.

Strategy – Get bullish close to 1.1340, against 1.0906, targeting above 1.2030 (much higher).

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