Aussie Crosses in for Period of Softness


AUDCAD – The AUDCAD rally from .9053 looks like the 5th wave in a 5 wave sequence that began in June 2006 at .8123. The long term trend is up as evidenced by the 3 wave decline from 1.0551-.8123 from February 2004 to June 2006. This strongly suggests that the rally from .8123 is just the first wave in a larger 5 wave rally that will eventually carry above 1.0551. Near term, we are looking for a correction in a second wave to test the February low at .9053 (at least) before the next leg up.

AUDJPY – The AUDJPY may be in the early stages of weakness but a break below trendline support drawn off of the 3/14 and 3/28 lows is required before we can confidently get bearish against the 4/17 high of 100.02. The rally from 88.48 is in 5 waves with an extended 5th wave (which itself appears to be in 5 waves). Extended 5th waves are often fully retraced, so we are looking for a move back to 93.79 on a sustained break of aforementioned trendline support. Both RSI and CCI have rolled over from above overbought on the daily.

AUDNZD – The AUDNZD broke below short term trendline support yesterday near 1.1265 and quickly traded down to 1.1163 today before reversing and rallying to test the breakout point as resistance. Still, a short term bearish bias is warranted as long as price remains below the former support line on a daily closing basis. Longer term, the real break and directional bias comes on a decline below the January low of 1.1055 or a rally through the March high of 1.1484. A glance at the monthly suggests that the break will be to the downside as the previous trend is down.