AUD/CAD
Commentary – We wrote last week that “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.” The pair dropped a bit more than expected to .8270 but as long as the June 2006 low at .8119 is intact, we are expecting a long term reversal. On the intraday charts, the rally from the low (.8271) looks corrective, which leaves open the possibility that we will see one more low (below .8271) before a reversal higher.

Strategy – Longer term bullish against .8119, target much higher (above .9514)

AUD/JPY
Commentary – The AUD/JPY is quite clear at the moment. It looks as if a 4th wave is complete (or very close to) at 93.20. Therefore, price should decline from current levels and come under 85.98 in a 5th wave before a larger correction takes place. The fact that the rally from the low has stalled at the 38.2% of 103.63-85.98 (wave 3) supports the idea that the rally from 85.98 is a 4th wave.

Strategy – Move to flat (from bearish)

AUD/NZD
Commentary – We wrote last week to “look for a correction to bottom near the 23.6% of 1.0911-1.1584 at 1.1425 (or the 38.2% at 1.1327).” The correction bottomed at 1.1331 (4 pips from the 38.2%) and price should now continue higher an register a new high in a 5th wave (above 1.1762). This would make 5 waves up from 1.0906 and give way to a larger correction. That will offer an opportunity to get aggressively bullish for wave 3 higher.

Strategy – Remain bullish, move risk to 1.1331, target 1.1762

Jamie Saettele is a Technical Currency Analyst for FXCM.