AUD/CAD
Commentary – Our count is tracking well so there is no reason to change our outlook. We are treating the rally from .8746 as wave B in a correction from .9513. We favor this view because the rally from .8749 is not a clean 5 wave impulse that would typically signal the beginning of a 3rd wave. Wave C should be underway now and we expect the pair to drop below .8746 in order to complete larger wave 2 in the next several weeks. We expect the bottom of wave 2 to be within the .8503-.8653 zone. .8503 is where wave C of the correction would equal wave A. .8653 is the 61.8% of .8119-.9513.

Strategy – Waiting for wave 2 to finish below .8746 so that we can align with wave 3 higher

AUD/JPY
Commentary – We wrote last week that “the decline from 107.70 to 105.35 remains corrective in nature so upside potential remains. However, that decline may very well be the first leg lower in a more complex correction. Coming under 105.35 would suggest that this is the case.” After breaking 105.35, the AUDJPY plummeted (as did all of the Yen crosses…and they are all tracing out the same patterns). There is a clear 5 wave decline from the top. This indicates that the AUDJPY has much more downside action in store. Near term, we expect to see a rally to at least 102.82, albeit in a correction. We will look for a top and reversal in the 102.60-104.55 zone. This is the 38.2%-61.8% zone of 107.70-99.45.

Strategy – Get bearish in the reversal zone (102.60-104.55), against 107.70, target much lower (below 99.45…likely below 90)

AUD/NZD
Commentary – Our bullish bias has proved correct as the AUDNZD is moving higher. The pattern is not especially clear and the pair is coming up on potential resistance from a line drawn off of the 11/27/06 and 5/10/07 highs. A daily close above this line instills confidence in the bearish bias. Until then, another leg down is possible.

Strategy – Remain bullish, against 1.0910, target break above 1.1659.

Jamie Saettele is a Technical Currency Analyst for FXCM.