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Euro / Aussie Offers Clues into Risk Trends

Euro / Aussie Offers Clues into Risk Trends

2011-08-31 22:53:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Euro / Australian Dollar

300 MinuteBars

Crosses083111_body_euraud.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

I wrote last update that “price has bounced from the former 4th wave area but the rally failed and another down leg maybe underway towards former resistance / 100% extension at 13263-13318.” The EURAUD has registered an oversold RSI on the 300 minute chart. This is often a sign that the last few subdivisions of the move are around the corner. In this case, that would entail a pip into resistance at 13350 before a final decline complete the bear leg. 13263-13318 remains support. This tells us a lot about the trend in risk as well. A bottoming in EURAUD more than likely would coincide with a top in the AUDUSD and equities.

Euro / British Pound

Daily Bars

Crosses083111_body_EURGBP.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

The EURGBP has traded sideways since the May high and a triangle may be forming. 3 waves can be counted thus far (down from the May high, up from the May low, and down from the July high). The current rally would compose wave D of the triangle and resistance is expected near the 6/10 high of 8975. If a triangle is unfolding, then expect consolidation for at least a month more before a break above 9082 (terminal thrust).

Euro / Canadian Dollar

300 MinuteBars

Crosses083111_body_eurcad.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

I wrote last update that “the EURCAD has drifted higher over the last week in what may be a 5th wave and therefore complete an impulse from the July low. If this count is correct, then the EURCAD should begin a larger correction, eventually dropping below 13990 before the next bull leg resumes. Recent weakness may mark the beginning of the correction.” The correction is underway. It is best to let corrections play out because it is simply impossible to know exactly what type of correction will unfold (sharp or shallow). A flat for example could see a test of the wave 5 high before a sharp drop back to 13990. It is best to stand aside.

Euro / Japanese Yen

300 Minute Bars

Crosses083111_body_eurjpy.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

Last update I wrote that “the EURJPY dropped to 10900 and the next leg is probably underway towards the 100% extension at 11200. Exceeding that level would target the short term channel line. The larger trend is down as long as price is within the channel that has defined the decline from the April high.” The EURJPY rallied to a new high but reversed barely short of the 100% extension at 11200. Given the 3 wave structure from the low, I am leaning towards the bear side. Short term resistance comes in at 11090.

British Pound / Japanese Yen

Daily Bars

Crosses083111_body_gbpjpy.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

The GBPJPY remains confined to a channel (which was broken after intervention earlier in the month but it seems to still hold weight). As long as the channel holds, favor the downside. Additional weakness exposes the March low at 12218 and then the 2009 low at 11880.

Canadian Dollar / Japanese Yen

DailyBars

Crosses083111_body_cadjpy.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

“I view strength as corrective therefore a pop above 7846 or even a test of 7960 would be considered a short candidate.” The CADJPY has reversed just shy of the 7900 figure several times this week. The rally from the low is left as a shallow 3 wave correction so continue to favor the downside.

Australian Dollar / Japanese Yen

Daily Bars

Crosses083111_body_audjpy.png, Euro / Aussie Offers Clues into Risk Trends

Prepared by Jamie Saettele, CMT

“The AUDJPY rally from the low is viewed as corrective and should be retraced. A pop above 8120 would face resistance at 8200 (former support). The minimum bearish objective is below 7652 but the March low is at risk in the event of another panic drop. If that level (7405) gives, then the May 2010 low comes into play at 7185.” The AUDJPY has reached 8200 and shows there are signs of a top such as intraday momentum divergence. Look lower.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday), technical analysis of currency crosseson Wednesday and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forex Stream. A graduate of Bucknell University, he holds the Chartered Market Technician (CMT) designation from the Market Technician Association. He is the author of Sentiment in the Forex Market. Send requests to receive his reports via email to jsaettele@dailyfx.com.

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