Currencies | Nov 18 2010
ATW's Strategic Prep Video from 15 November last week follows up on previous analysis regarding the direction for AUD/USD. Jerry Simmons explains why the break below 0.98 is important, with the level now likely to act as technical resistance. Below are summary and Comment regarding the ATW Strategic Prep Video 2010-11-05 “AUDUSD Daily + 30 Min – Possible Wave 4 of 5 Wave and DT” (69.8 MB; .wav format; 48 min 42 sec total duration).
Summary and Comments
• The previous major high in the AUDUSD, on weekly and daily charts was obtained in 2008 and it was at 98.49. The current high is at 1.0182; hence it has taken out the previous high and established a new high.
• Since then we’ve seen three consecutive lows, 2 weeks ago at 0.9813, a week ago at .9828 and .9811 this week (until Monday).
• Any confirmed break-out (b/o) below 0.9800 would be a significant event and herald a possible big and longer-term downturn in the AUD, not just a temporary retracement.
• However, at the moment, the odds favour a move up to the 0.9970 to 1.0015 level as a re-test. If so, this could then be interpreted as a wave 4 in a 5-wave Eliot move which would be followed by wave 5, a significant down move. As soon as wave 4 is completed, we can project the probably completion zone for wave 5 and once wave 5 is completed, the likely retracement to the Fib 786 level of wave 5 as a high-probability trade.
• In any case, the 0.9970 – 1.0015 level represents formidable resistance to the AUD’s rise.
• Based on this analysis, Jerry updates the RBO (reversal break-out) sequence that must be completed in order for the analysis (that the AUD is reversing to the downside) to be confirmed as follows:
o 1st step: RBO (reversal break-out) below 0.9950. This has already happened and that area now serves as resistance (“role-reversal”)
o 2nd step: RBO below 0.9800
o 3rd step: RBO below 0.9650 (D-Alt)
o 4th step: RBO below 0.9450-0.9550 (D-Alt + DPTL zone) – significant support.
• Step 1 is often a false alarm; the support mostly holds and prices move back up. Step 2 is the most important of them and follow-through is normally expected, i.e. if that support is broken, we can expect the price to move to the 3rd support level (0.9650 in this case).
• The recent high in the AUD (1.0182), even though outside the maximum penetration point for a Double Top (DT) was due to the FOMC announcement of a week ago (600bn Dollar quantitative easing). But on a daily chart, a DT has already been confirmed. Hence, in Jerry’s view, the short term trend in the AUD is now down, although the medium and long-term trends are still up. The “short-term trend is down” analysis would be invalidated if the AUD moves above the 1.0015 level. If that level holds, it confirms the short-term trend in the AUD as down.
To view the ATW Strategic Prep Video (originally from November 15, 2010) titled "AUDUSD Daily + 30 Min – Possible Wave 4 of 5 Wave and DT" click HERE or visit the FNArena Investors Education section of the website.
All views expressed are Jeremy Simmons's, not FNArena's (see our disclaimer).
Jerry Simmons has over 25 years of full-time trading experience. He is the senior partner and head mentor for the “Masters” Programme within the education system at New York based Advanced Trading Workshop (ATW). ATW recently set up shop in Australia through the establishment of ATW Australia.
FNArena is pleased to have Jerry Simmons as a highly valued contributor to its service which aims at both educating investors and assisting them with their own market analyses.
The above mentioned video has been added to the FNArena Investor Education section at https://www.fnarena.com/index2.cfm?type=dsp_minc_education)
The direct link to the video behind today's story is:
About ATW Australia
Founded in June 2010, ATW Australia is a “one-stop-shop for all a trader needs to succeed”: quality education for new traders, superb advanced trading education, fast unfiltered data, a world-leading trading platform, customer oriented competitive brokerage, quality ‘Made in the USA’ specialized trading computers, trading magazines, and the all-important psychological mentoring and coaching for traders. The trading educational products are provided by the Advanced Trading Workshop, Inc. in New York, all other services are provided by a network of partners that were chosen based on their superior products and services in their specific field of expertise. FNArena is one such partner.
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