Technicals | Dec 12 2012
Bottom Line 11/12/12
EW Trend: Corrective
Price Trend: Up
Trend Strength: Weak
Technical Discussion
LAYMANS:
The little Aussie Battler is continuing soldier on. Yet it just can't seem to make the type of headway needed to break clear of the 2 years of choppy sideways price action that we have had to patiently endure. If it's any consolation, we are continuing to see all price action, pretty much since the beginning of 2011, as being productive rather than degenerative. Hard to fathom I know. Yet as traders we just have to accept that there are stages in the evolution of all markets where larger patterns, as part of larger cycles, are required before any discernible trends can look to reestablish. And across numerous markets, this is simply where things presently sit. Without doubt these trends will return. They always do. And when the timing is right, we need to be ready to take advantage, not fed up looking for the exit doors. Check out a recent article posted by Nick on The Chartist's Facebook site . It's titled 'China's retail investors have given up on the stock market; could we be approaching a bottom? ' It is uncanny how often right at the bottom of cycles, notoriously almost to the tick, people are so fed up they completely throw in the towel. It is almost a universal given in the psyche of human nature. An article worth reading as it applies to not only the financial markets, yet challenging moments in life as well. So lets continue to persist with the AUD for moment. If it was a micro pattern with all the same characteristics, we would be getting well and truly ready to pounce. This is exactly the same thing, just bigger.
TECHNICAL:
We continue to be in a quandary about whether the Wave-D has completed, and if it has, whether the Wave-E is now highly evolved with one last probe to the downside being required to complete this final leg of the journey. Put it this way, I'm not seeing anything to get excited about at the moment from a bullish perspective, even though we continue to be longer term positive here. All that means is that price continues to need more time. Yet as I alluded to do tonight in the laymans section, lose focus at your own peril. We've hung in there for so long now, it really isn't the time to turn our backs on it. Lets rehash on the bullish prognosis here. The larger Elliott symmetrical triangle continues to have a lot to like about it and is more than likely a higher degree Wave-(B). If this proves to be the case then the next stage of the cycle will be a higher degree upside move within a Wave-(C) with it potentially being a couple of years in the making, as well as upside impulsive in nature. We cannot ignore the fact either that all price action has taken place above a strong line of old resistance at 94.00 that has now proven itself to be a strong line of support. This is a bullish scenario as well. It is the more immediate view on price though that continues to remain clouded. Like I said, the upside price moves off the early October lows are nothing to write home about and would have to immediately spring into action strongly to the upside for this view to be altered. There is also some Type-A bearish divergence lingering around and this is also not backing any sudden move north either. As such, we continue to look for one last downside dip to occur, with parity still on the radar as a final clean out move that could well set price up for the big move forward we have been longingly waiting for. Still bullish as stated. Yet if it requires more time, so be it.
Trading Strategy
I'm still not willing to jump in on this yet. Although I do believe that we will be trading the currency higher at some stage over the coming months. Whether it be off the proposed parity level if clear buyer support can be witnessed. Or from higher levels via a swing or momentum trade. Any of these scenarios continue to have appeal regardless. The challenge is to simply time the entry correctly so as we have the right type of momentum on our side. It's certainly not about picking a low. If we are riding this long at higher levels, so be it. We just need to ensure we don't jump the gun and get caught unproductively in the type of price action that has dominated for the past couple of years. Keep it on your radar.
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