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Watch for an AUDUSD, NZDUSD Divergence

Watch for an AUDUSD, NZDUSD Divergence

2011-12-19 23:19:00
Jamie Saettele, CMT, Sr. Technical Strategist
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FXCM Expo Videos (educational)

Innovative Techniques with Traditional Technical Indicators

Trading with the Elliott Wave Principle

Seeing the Forest from the Trees: An Analysis of Global Markets

S&P and Dow (with o/n fair value)

Daily Bars

121911EndofDay_body_spx500.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

Stocks were down but on light volume, which is to be expected this time of year. A triangle or flat may be underway from the October high. Lower price are likely in both cases although a reversal higher is likely this week if a triangle is underway. Watch the trendlines for support and 11463-11624 in the Dow and 1172.90-1183.90 in the S&P. I am bearish as long as the S&P is under Friday’s high (1230.60). The arrows indicate days when the Dow has made a new high and the S&P has not, thus indicating divergence.

Euro / US Dollar

60 Minute Bars

121911EndofDay_body_eurusd.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

13065-13100 resistance has held so far and I favor a test of the 2011 low, probably as a terminal thrust from a triangle, before a rally to finish the year (in order to relieve extreme sentiment). 13083 is the pivot.

AUDUSD and NZDUSD

300 Minute Bars

121911EndofDay_body_audusd.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

Like stocks, the AUDUSD and NZDUSD may be trying to find December lows. Also like stocks, I’ll use Friday’s highs (10027 and 7645) as pivots. A push above these levels would suggest that C wave rallies are underway towards at least 10400 and 8000. Until then, I’ll favor AUDUSD shorts against 1.0000. Resistance is now 9905/35. The bearish target remains the trendline near 9800 (gap is 9773). ALSO - a new low in AUDUSD (below 9861) without a new low in NZDUSD would indicate a divergence typically seen at turns (think Dow and S&P above). Also, notice the similarity in form of the declines from the late October highs and December highs. These are examples of fractals in markets.

Australian Dollar / US Dollar

60 Minute Bars

121911EndofDay_body_audusd_1.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

The 60 minute reveals a short term head and shoulders continuation. Interestingly, the h&s objective would be about 9770 (distance from head to neckline subtracted from breakout level). Again, the post Thanksgiving gap is at 9773.

US Dollar / Swiss Franc

300 Minute Bars

121911EndofDay_body_usdchf.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

Price is holding the Elliott channel and former 4th wave support (9342) as well. The implications are for a final high (above 9546) before a larger decline. 9295 is the pivot.

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)

60 Minute Bars

121911EndofDay_body_usdollar.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

Having held support from the former 4th wave at 10005, near term USDOLLAR expectations are for one more high (above 10090) before corrective weakness takes hold. Friday’s low is the pivot.

Silver and Gold

300 Minute Bars

121911EndofDay_body_gold.png, Watch for an AUDUSD, NZDUSD Divergence

Prepared by Jamie Saettele, CMT

Silver and gold are declining in impulsive fashion from 33.67 and 1762.58. The recent bounce should be fully retraced in 5th wave declines. Watch for tests of the September lows at 26.07 and 1531.95 (or a divergence with one metal dropping under the low and the other holding). Tops are probably in place near term as per Elliott channeling and the late day divergence (new high in gold but not silver).

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter @JamieSaettele

To be added to Jamie’s e-mail distribution list, send an e-mail with subject line "Distribution List" to jsaettele@dailyfx.com

Jamie is the author of Sentiment in the Forex Market.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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