The failed AUDNZD rally near former support (now resistance) last week and an 8 day triangle in the EURAUD suggest that the next leg of Australian Dollar weakness is around the corner.
Euro / Australian Dollar
240 Minute Bars
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
FOREXAnalysis: Near term, a triangle may be unfolding from the 2/1 high. Triangles typically consist of 5 waves. The turn lower from this morning’s high is probably the final leg of the triangle. Expect support at 13000/10 if reached. The measured objective is 13480 (width of triangle at its widest part added to the top of the triangle or 13190 + (13190-12899)). If the 13010 order isn't triggered, then I'll look to buy above 13190 with a tighter stop.
FOREX Trading Strategy: I’m long against 12895.
Australian Dollar / New Zealand Dollar
Daily Bars
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
FOREXAnalysis: The most recent commentary regarding AUDNZD was from January 17th. I wrote then that “if 2013 is ‘the year of the breakout’, then the next big AUDNZD move is probably lower…a lot lower. A multiyear head and shoulders top is complete in the AUDNZD. After a false break in December, price is once again below the neckline. Weakness below October’s low (12370) is needed to get comfortably bearish.” After the break of 12370, on 2/1, it appears that a final bounce took place last week.
FOREX Trading Strategy: Looking to position for a sharp breakdown on strength into 12280-12310….against 12435 (February high).
Euro / Japanese Yen
Daily Candles
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
FOREXAnalysis: Last week’s commentary remains valid – “the advance from 10124 is exactly 2.618 x the July-October rally. Combined with resistance from the incredibly steep trendline and 2010 high at 12790, the current level is as good as any for a turn lower.” After taking out the 2/5 pivot low at 12401, price turned higher yesterday. Today’s failure occurred at the underside of the line that connects the 1/29 and 2/5 pivot lows, possibly hinting of something more bearish in the works.
FOREX Trading Strategy: “Signs of a top and trading from the short side are certainly 2 different things. An insane amount of patience and discipline is required in order to successfully trade turns because most attempts are stopped out….this isn’t for everybody.” I am bearish against the February high and targeting 120-121. Given my EURAUD stance, AUDJPY downside is probably even greater.
--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter for real time updates @JamieSaettele
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Jamie is the author of Sentiment in the Forex Market.
