December 28, 2009 - AUD/USD - Assessing Wave Structure

AUD/USD


* 4H: The AUD/USD followed through after the bullish divergence last Wednesday. (Refer to Daily Video Technical Update 12.23.2009).
* The pair rallied from 0.8750 to 0.8875 and in the 4H time-frame is considered a single swing.
* Looking back, we see that declines have been in a 3-wave structure, or that of an impulse wave, while rallies, have been in the 2-wave fashion. This means we may want to be a bit more patient stalking this retracement, as there may be a second leg.
* Now if the current rally swing stops as it tests the 50-MA, there may be a decline and the fashion of this decline may be clue to whether there will be 2-leg correction, or whether this will be a abcd retracement or simply a sideways correction which means the 0.8900 is the short-term resistance.
* If the decline is slow and a bullish signal follows we may have a test of some retracement patterns. 50% is near 8.8950, and 61.8% is near 0.9000. Again, depending on the manner of the rally – if it is not too aggressive – we may look for bearish continuation after topping action near these retracement levels.
* Daily: Looking at the Daily time-frame, we see that this retracement was the anticipated pullback, from which a swing to 0.8350 can be projected.



Fan Yang
Currency Analyst
Commodity Trading Advisor

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