Medium term
Trade view / 29 September 2016 at 7:48 GMT

Bearish reversal formations building in AUDUSD

Analyst / PIA First
United Kingdom

USD Index – We deploy a system that is mainly trend following. The current market conditions are neither good for the mind nor the wallet. The USD continues to hold within the large bullish ascending triangle. We expect a final breakout to the upside but, in the meantime, expect mixed and volatile trading to continue. 
USD Index
Source: Saxo Bank
The AUDUSD looks prime for a move to the downside but there is scope for a reversal formation to build before we see sustained losses. 

Monthly – Like most USD pairs, we have seen a long period of consolidation (13 months). We are in an expanding wedge formation that has an eventual bias to break to the downside. 
 Source: Saxo Bank

Weekly – Elliott wave dictates that the 4th wave correction should now be complete at the 38.2% pullback level of 0.7849. However, until we see a break of the base of the bullish channel at 0.7450, this will not be confirmed. 
 Source: Saxo Bank

Daily – Highlights a consolidating triangle formation within the channel. Three points of note here:

1. We are rejecting the triangle top
2. We have a DeMark correction count 9 on the daily chart
3. The 6-hour chart could post an Evening Star formation. 

An AB=CD formation would take the pair to 0.7080
Source: Saxo Bank 

Intraday (one-hour) – Forming an Ending Wedge pattern. A break of 0.7657 is needed to confirm the breakout. However, with 0.7643 being pivotal (support and resistance) since the 21st September, we could ‘bounce’ higher from this support and then make a bearish Head and Shoulders formation. Far too early to tell. 
 Source: Saxo Bank

Watching price action today and will look to sell at 0.7685 IF the pattern looks likely to compete. The lack of direction in the USD is likely to continue. Maybe Fed chief Janet Yellen will give us some direction tonight, but I wouldn’t bank on it!

Management and risk description

On a move through 0.7600, we adjust stop to entry


Entry: Selling close to 0.7685

Stop: 0.7725

Target: 0.7450 (channel base) and 0.7080 (AB=CD)

Time horizon: Medium term

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
04 October
Bullionaire Bullionaire
Im still in this trade , anybody else ?


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