Forex Outlook

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6589; (P) 0.6688; (R1) 0.6834

AUD/USD gaps higher today but after all it’s still staying in range of 0.6543 and 0.7014. With 0.6543 support intact, there is no confirmation of completion of rebound from 0.6008 yet. Further rally cannot be ruled out and break of 0.7014 will target 38.2% retracement of 0.9849 to 0.6008 at 0.7475. On the downside, though, break of 0.6543 will confirm that rebound 0.6008 has completed and will bring retest of this low. Read the rest of this entry »

Daily Pivots: (S1) 0.6559; (P) 0.6730; (R1) 0.6824

As discussed before, AUD/USD’s rebound from 0.6008 could have already completed at 0.7014 already. 4 hours MACD’s turn negative adds some more credence to this case too. Break of 0.6549 minor support will confirm and bring retest of 0.6008 low. On the upside, though, above 0.7014 will indicate that rise from 0.6008 is still in progress for 38.2% retracement of 0.9849 to 0.6008 at 0.7475.

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Daily Pivots: (S1) 0.6648; (P) 0.6755; (R1) 0.6869

AUD/USD weakens again after failing to take out 0.6891 resistance but after all it’s still staying in established range. Further rise is still mildly in favor as long as 0.6549 minor support holds and break of 0.6891 will indicate that rebound from 0.6008 has resumed for 38.2% retracement of 0.9849 to 0.6008 at 0.7475. On the downside, below 0.6549 support will argue that rebound from 0.6008 has possibly completed and flip intraday bias back to the downside to retest this low. Read the rest of this entry »

Despite edging lower to 0.6008 early last week, AUD/USD was supported above 0.6 psychological support and 76.4% retracement of 0.4773 to 0.9849 at 0.5971 and rebounded strongly. Subsequent rebound was limited at 0.6891 and retreated mildly, turning intraday outlook neutral for the moment. On the downside, break of 0.6529 will suggest that the rebound from 0.6008 has finished and will flip intraday bias back to the downside for retesting this low. On the upside, above 0.6891 will indicate that rise from 0.6008 has resumed for 38.2% retracement of 0.9849 to 0.6008 at 0.7475.

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AUD/USD was bounded in consolidation between 0.6330 and 0.7237 last week and such choppy consolidation might continue further. Above 0.7076 will argue that rebound from 0.6330 is extending further to 0.7237 and above. However, upside is expected to be limited below 0.7674/83 cluster resistance (61.8% retracement of 0.8519 to 0.6330 at 0.7683, 38.2% retracement of 0.9849 to 0.6330 at 0.7674) and bring down trend resumption. On the downside, below 0.6495 will bring retest of 0.6330 low and break will confirm that recent down trend has resumed for next long term fibonacci support at 76.4% retracement of 0.4773 to 0.9849 at 0.5971.

In the bigger picture, the strength of the fall from 0.9849 strongly suggests that it’s developing into an impulsive fall in at least the same degree as the up trend from 0.4773 to 0.9849. The current interpretation is that first wave of such fall has completed at 0.7802. Second wave correction has completed at 0.8519 and fall from there should represents the third wave decline. In other words, AUD/USD is probably in the middle of such decline only. Any interim correction should be limited below 0.7802 support turned resistance and bring down trend resumption.

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Before last week started, European leaders announced a rescue plan that includes state guarantees on bank debts until the end of 2009 with maturities up to five years. The governments are allowed to recapitalize financial institutions by buying bank stakes with preference shares or other instruments. ECB also pledged to look at enlarging access to the system of guarantees to include commercial paper even though it doesn’t have the legal power to do so yet. Germany later passed the bank rescue package which includes up to 400b euros in bank guarantees, 5% provision of losses and recapitalization funds up to 80b euros. France will create an entity to assist banks and guarantee limit will be up to 320b euros. Austria implemented a 100b euros rescue plan which provides support to the banking system mainly via guarantees while the government is also allowed to buy shares in Austrian banks.
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AUD/USD’s decline from 0.9849 accelerated even further last week and dived to as low as 0.6330, taking out 0.6773 key medium term support without hesitation. From a short term angle, initial bias remains on the downside this week as long as 0.6759 minor resistance holds. Further decline is still expected to next downside target of 76.4% retracement of 0.4773 to 0.9849 at 0.6712 at 0.5971. On the upside, note that mild bullish convergence condition is being displayed in 4 hours MACD. Above 0.6759 will argue that a short term bottom is in place and bring rebound to 0.7135 and above before resuming the down trend.

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Daily Pivots: (S1) 0.6341; (P) 0.6749; (R1) 0.7048

AUD/USD rebound strongly after diving to as low as 0.6445, just hitting mentioned target of 100% projection of 0.9849 to 0.7802 from 0.8519 at 0.6472. With 4 hours MACD crossed above signal line, an intraday low is in place. Outlook is turned neutral for the moment, with bias mildly on the upside for further consolidation/correction. However, upside is expected to be limited by 0.7361 resistance and bring fall resumption. On the downside, below 0.6655 minor support will flip intraday bias back to the downside for retesting 0.6445 low.

In the bigger picture, a long term top is in place at 0.9849 with bearish divergence condition in monthly MACD and RSI. Considering the corrective three wave structure of the multi year up trend from 0.4773 to 0.9849, it could represents a correction to multi decade down trend or part of consolidation. 61.8% retracement of 0.4773 to 0.9849 at 0.6712 is already taken out. Next medium term target is 76.4% retracement level at 0.5971. On the upside, medium term outlook will remain bearish as long as 0.7802 support turned resistance holds even in case of stronger than expected rebound.

Daily Pivots: (S1) 0.6928; (P) 0.7142; (R1) 0.7270

AUD/USD’s recent decline resumes after brief consolidation and dives to as long as 0.6746 so far, jut inch above mentioned long term fibonacci level of 61.8% retracement of 0.4773 to 0.9849 at 0.6712. At this point, there is no sign of a bottom yet. Any recover should be brief as long as 0.7361 resistance holds and further decline is still expected from short term angle. Break of 0.6712 will target 100% projection of 0.9849 to 0.7802 from 0.8519 at 0.6472 next. On the upside, above 0.7361 will indicate that a short term bottom is in place. But recovery should be limited by 0.7802 support turned resistance and bring another fall.

In the bigger picture, a long term top is in place at 0.9849 with bearish divergence condition in monthly MACD and RSI. Considering the corrective three wave structure of the multi year up trend from 0.4773 to 0.9849, it could represents a correction to multi decade down trend or part of consolidation. Thus, the current fall should at least extend to 61.8% retracement of 0.4773 to 0.9849 at 0.6712. Firm break will target 76.4% retracement level at 0.5971. On the upside, medium term outlook will remain bearish as long as 0.8519 resistance holds even in case of stronger than expected rebound.