Jamie's Pick: 05/13/11
There is no change to the AUDUSD pattern as the bounce is corrective which keeps the bearish pattern bias intact. “The rally from 10536 is viewed as a B wave within a larger correction. As such, expectations are for price to roll over in wave C this week.” Wave C in the AUDUSD is underway. An objective is the 100% extension of the decline from 11011 at 10413. This level intersects with parallel channel support on Monday.
As suspected yesterday, the poke above 7974 yesterday completed the correction from 7814. Expectations are for a sharp drop in either a 3rd or C wave. Objectives are the 100% extension at 7666 (also 100 day SMA) and 2/18 high) and the 7500 area – which is defined by the 61.8% retracement of the rally from 7114, 161.8% extension of the decline from the top and 200 day MA.
The USDCAD inverse head and shoulders pattern suggests that price is on the verge of exploding higher soon. A break above 9721 exposes the 100% objective at 9780 – which intersects short term channel resistance on Monday. Additional strength would target 9850 and then the 161.8% extension at 9950 (March high is at 9975). It is worth noting that trading above the April high of 9721 would be the first time price exceeds the prior month’s high since May 2010.
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