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EURAUD at Fibonacci Extension: Reversal Next Week?

EURAUD at Fibonacci Extension: Reversal Next Week?

2011-09-02 17:48:00
Jamie Saettele, CMT, Sr. Technical Strategist

Euro / Australian Dollar

300 MinuteBars

Crosses090211_body_euraud.png, EURAUD at Fibonacci Extension: Reversal Next Week?

Prepared by Jamie Saettele, CMT

I wrote Wednesday that I was looking for “a final decline to 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.” The EURAUD has reached 13263 but short term structure does not look complete. Small waves 4 and 5 are expected to unfold. Expect a bounce into 13400 in wave 4 of c before one final low gives way to a reversal.

Euro / British Pound

Weekly Bars

Crosses090211_body_eurgbp.png, EURAUD at Fibonacci Extension: Reversal Next Week?

Prepared by Jamie Saettele, CMT

Despite recent weakness, I maintain that a triangle is unfolding. “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

Crosses090211_body_eurcad.png, EURAUD at Fibonacci Extension: Reversal Next Week?

Prepared by Jamie Saettele, CMT

To review, the rally from 13408 is in 5 waves, which suggests the beginning of a larger bull move. Of course, a 5 wave rally is followed by a 3 wave correction. That correction is underway now. I wrote Wednesday that “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.” Weakness the last 2 days suggests that the correction is a zigzag (sharp). Look lower to complete wave a of the correction before a bounce in wave b into 14100.

Euro / Japanese Yen

300 Minute Bars

Crosses090211_body_eurjpy.png, EURAUD at Fibonacci Extension: Reversal Next Week?

Prepared by Jamie Saettele, CMT

“Given the 3 wave structure from the low, I am leaning towards the bear side. Short term resistance comes in at 11090.” The EURJPY is well on its way to retracing the entire 3 wave rally from 10804. I favor selling rallies into resistance at 10990 with stops above 11100. A drop below 10804 would shift focus to the March low at 10645 and the 2010 low at 10541.

British Pound / Japanese Yen

Daily Bars

Crosses090211_body_gbpjpy.png, EURAUD at Fibonacci Extension: Reversal Next Week?

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


Crosses090211_body_cadjpy.png, EURAUD at Fibonacci Extension: Reversal Next Week?

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 reversed right at its channel resistance yesterday, which bodes well for bears. The rally from the low is left as a shallow 3 wave correction - favor the downside and a drop below 7673.

Australian Dollar / Japanese Yen

300 Minute Bars

Crosses090211_body_audjpy.png, EURAUD at Fibonacci Extension: Reversal Next Week?

Prepared by Jamie Saettele, CMT

The AUDJPY rally from the low is viewed as corrective and should be retraced. 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. Currently testing its short term support line, one more high cannot be ruled out. 8348, the 100% extension of the rally from 7651, is an area that may produce a top.

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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