AUDCAD
AUDJPY
AUDNZD
Commentary – We remain long term bulls of the AUDCAD and a bullish bias is warranted against .8556. The reason for our long term bullish stance is the clear 5 wave rally from June 2006 to April 2007 and the subsequent 3 wave correction into the August 2007 low. Near term, the pair appears to be tracing out a series of 1st and 2nd waves (as labeled). Price must remain above .8556 in order for us to remain bullish.
Strategy – Bullish against .8556, targets .9681 and 1.0531
Commentary – We wrote last week that “the rally that has followed is impulsive, suggesting additional upside potential. That makes the decline an a-b-c correction and suggests that 106.88 will be exceeded. A cautious bullish bias is warranted against 101.85 for a test of 106.88.” The rally has extended and 106.88 is very close to current price. As the daily chart shows, a push through 106.88 would satisfy minimum expectations for the end of the rally from 85.98. A push through the July high at 107.70 seems reasonable too in order to complete an even larger degree advance.
Strategy – Bullish, move risk to 105.12 (from 101.85), move target to 107.70 (from 106.88)
Commentary – We have been bullish since 1.1600 but have reason to worry now. The rally from 1.1592 is choppy and looks much more like a B wave than the beginning of a 3rd wave. What is likely happening is that the AUDNZD is tracing out an expanded flat from the 1.2031 (September high). As long as price is below 1.2201 (138.2% of wave A), our working assumption is that the AUDNZD will trade lower in a C wave to below 1.1592 before the larger advance resumes.
Strategy – Exit bullish position.