1. AUDCAD
2. AUDJPY
3. AUDNZD
AUDCAD We mentioned last week that With the rally from .8288 to .9305 stalling roughly (a little further) 161.8% of the .8119-.8684 rally, probability favors a correction in the wave 4 position?The intersection of the 38.2% of .8288-.9305 at .8918 and the trendline occurs during the first full week in March. The calculation of Fibonacci levels and thus the intersection of the trendline and Fibo support changes. The potential retrace level is now at the 38.2% of .8288-.9305 at .8971 and the intersection of the trendline and .8971 is in the 3rd week of March. Initial support is at the 1/11 low of .9116.
AUDJPY From last week: a major top could be forming. Monthly RSI is above 70 for the first time since November 2005 1 month before the previous top at 91.32. Also, COT data indicates extreme levels of bullishness on the Aussie and close to extreme levels of bearishness for the JPY. Major turns occur at extreme points. This weeks turn down from channel resistance reinforces the topping argument. The pair has been in an uptrend since October 2000. The portion of the uptrend since June 2004 is the 5th wave of the uptrend. The pair has traced out 3 waves within the 3rd wave. As such, this weakness is likely the beginning of a 4th wave. Initial support is at the 23.6% fibo of 82.06-96.42 at 93.03. A more pronounced decline to the 38.2% may be more likely as the 38.2% is at 90.90 and passes through former resistance from the December 2005 high at 91.32.
AUDNZD Price action in the AUDNZD has been difficult to decipher lately. A breakout on the weekly last week caused us to get bullish (of course we now know that this break was false). Sellers are targeting 1.1137 with reckless abandon and a break lower gives scope to a test of the 78.6% of 1.0428-1.2424 at 1.0858. When the picture is not clear look at a long term chart (it usually helps and it did this time). A monthly chart shows rather clearly a 5 wave triangle unfolding since 1984. The false break higher last August has led to a sell-off. The triangle is of the descending variety, thus the downside is ultimately favored (over the long term). In the near term, focus is on the 12/26 low at 1.1137. Key resistance is just below 1.1400 (1.1388 specifically).
