Sunday, October 17, 2010

audusd

Weekly
Doji formed at resistance level.  That doesn't mean the reversal will certainly follow; it is an indecision candle instead.   Thus we should be aware that price is always right and a continuation to the upside could happen.

In the weekly chart I've plotted some elliot counts, and a possible "narrow" zone to complete a 5 wave impulse movement.  E-wave theory is not as reliable as I would like it to be. Only when previous highs or lows are taken out, the movement is confirmed, so... not a good "forecasting" tool.  The last leg should develop also in a 5wave impulse movement.  The current count is completely speculative. With the information we have, a reversal could happen.  Stochastics is overbought but hasn't yet provide a bearish crossover in this timeframe.


Daily
In the daily, price steadily climb and reach the expected target zone of  0.99926/50 and actually price indeed poke the 1.0000 round number.  Friday's close had a high of 1.0002 and formed a spinning top, so... really interesting time to see what happen next week.  I've updated the regression channel in the chart below.  A brake to the downside of the channel would mean the start of the correction.  Stochastics is deeply overbought but as the last bar in the chart, a bearish crossover is in place. There is still the MACD divergence.  Eventhough, a trade against the trend would be a bold move, a smarter action would be enter long at a pullback.


Price has broken previous structure so the last major resistance to break is the 1.0000; if price closes above it, I don't see any reason for a slowdown in the uptrend or even a decline. Next week will be critical.
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