Technicals | Dec 12 2013
Bottom Line 10/12/13
Daily Trend: Neutral
Weekly Trend: Down
Monthly Trend: Down
Technical Discussion
The Australian Dollar has failed to respond to the U.S Dollar's recent bout of weakness which is probably not a very good sign at all. Based on where we are presently placing the larger trend, the overall downside move thus far can only be considered shallow. With the 88.50 low tagged back in August, landing right in the middle of the 38.2% – 50.0% retracement zone only, with the deeper of these targets yet to be achieved at 85.40. Yet our longer term labeling remains bullish even if as low as 80.00 is tagged down the track which is the 61.8% pullback zone. So even though things look very dour when scanning the daily charts, the bigger picture patterns continue to remain more than typical.
First port of call and best case scenario from a bullish perspective is the double bottom circa 88.50. If buyer support comes back in strongly here, and then triggers above 97.50, then the pattern target sits around 106.00 where a big band of supply clearly sits. Yet as already mentioned, with the Aussie failing to spark limited interest lately on U.S Dollar weakness, it would not surprise to see the double bottom fail to hold. In which case the 50.0% retracement circa 85.40 will be the next port of call where speculative buyers will be tempted to come back in and test this weakness that has been in place for around two and a half years. Sure there has been some dabbles of buying going on at the these present levels, yet under the circumstances, there should really have been a lot more. It basically means we have back ground weakness in play at the moment and overall this is continuing to weigh on matters.
Trading Strategy
I can't help but feel that any future strength that transpires will be a selling opportunity for agile traders. The obvious point where future rejection is likely to take place is the strong line of resistance circa 94.00. So any clear cut rejection off here post any counter to trend moves, would clearly be a sell trigger for mine. We've discussed the double bottom trigger in our review tonight yet it appears to be a long shot only. So I guess that means we see the 50.0% retracement zone circa 85.30 as a more likely scenario short to medium term. Stranger things have happened of course, yet I personally can't even get remotely bullish on this until 97.50 can be broken past with conviction. So even though our longer term prognosis is a positive one, such a turn of fortune could still be many months away just yet .
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