AUD/CAD

Commentary – The AUD/CAD has traded sideways since last Wednesday (in an 85 pip range). This range is most likely just the consolidation before the down leg that we are looking for occurs. “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 “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.” The AUD/JPY has rallied and is in the center of the estimated reversal zone. At present, the AUD//JPY is just above the 100% extension of 99.45-102.60/99.87 at 103.04. This is where wave a of the correction is equal to wave c. There is no sign of a reversal yet, so price could test the mentioned 61.8% level at 104.55.

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 AUD/NZD is moving higher. We wrote last week that “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 bullish bias.” The pair has tested this line the last three days but failed to close above it. The intraday charts show no clear patterns either.

Strategy – Remain bullish, move risk to 1.1074 (from 1.0910), target TBD
 
Jamie Saettele is a Technical Currency Analyst for FXCM.