After continuing to push higher in Europe with a peak just above the $49/barrel level in WTI, there was a sharp decline to lows around the $47.25/b area as high volatility continued.
AUDUSD: Relatively narrow ranges prevailed for the Australian dollar with modest gains and a fresh attack on the 0.7400 resistance area as the US dollar struggled to secure a further net advantage as commodity prices strengthened.
Higher bond yields and slightly more hawkish comments from Reserve Bank of Australia deputy governor Chris Kent were supportive and AUDUSD strengthened to near 0.7440 on Wednesday.
Monthly: We have held near the upward trend line from the Expanding Wedge formation for 14 months now. This formation has an eventual bias to break to the downside with the target area being the start of the wedge at 0.4815.
This lines up the 261.8% extension level and the fifth wave (Elliott Wave formation) at 0.4735. For the pair to make a move to these levels, we would probably need a meltdown in stocks (if not world-order). Hard to believe, but then again, so was a Trump victory!
Weekly: Trend of lower highs capped buying with the week of November 7 posting a bearish Outside Week. This formation often signals the top of a trend. With the April 8 high peaking close to the 38.2% pullback level of 0.7849 (from 0.9504-0.6826), the fourth wave (Elliott Wave) is not considered complete.
The weekly Ichimoku Cloud has stalled selling this week. Last week’s Marabuzo (mid-point from open to close) is seen at 0.7436
Daily: Upward pressure (correction) has been seen for the last two days and continued overnight. The previous support level (that now becomes resistance) is seen at 0.7435.
This level needs to hold today or a more aggressive correction higher could be seen. Medium-term, we have a 161.8% Fibonacci level at 0.6720 (from 0.7835-0.7145).
Intraday (four-hour): We look to have completed the first bearish wave count with the move higher being part of the corrective formation. As this is the thirrd wave (on the daily chart) corrective rallies are likely to be short and limited.
We have had a short-term trigger to get short (sold two units) at 0.7433.
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Source: Saxo Bank
Management and risk description
A break of the channel base (0.7390) and will lower stop to the day's high trade.
Entry: sold two units at 0.7433.
Target: medium-term 0.6720.
Time horizon: two to three weeks.
— Edited by Michael McKenna
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Non-independent investment research disclaimer applies. Read more