Short AUD/USD and Long USD/CAD
AUD/USD: Although setbacks have stalled out for now ahead of 0.9800, we continue to favor risks for additional downside and like the idea of selling into current rallies. Ultimately, we see the market in the process of carving out a major top and any rallies from here should be well capped below 1.0200 on a close basis. Only back above 1.0200 gives reason for concern, while below 0.9945 should accelerate to 0.9800 and below. POSITION: SHORT @1.0170 FOR AN OPEN OBJECTIVE; STOP 1.0320.
USD/CAD: Daily studies are starting to look a little stretched, and this in conjunction with longer-term cyclical studies which warn of a major base, leave us looking for opportunities to buy rather then selling into the downtrend. The latest dip below the 0.9800 figure is viewed as an excellent opportunity to establish a very playable counter-trend long position, with the market seen well supported in the 0.9700’s (see 2008 range lows). Ultimately, only a daily close back below 0.9700 would delay outlook and give reason for concern. POSITION: LONG @0.9765 FOR AN OPEN OBJECTIVE; STOP 0.9615.
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