AUDUSD collapsing? Tuesday, April 30, 2013

Hi Traders,

Is the AUDUSD on the verge of starting a new downtrend?  If this analysis is correct  the Aussie has completed an "a-b-c-d" and it's ready for wave "e" downwards.

But this time there's something that worries me: the downtrend could be quite swift and the amplitude of the "depreciation" could be considerable and protracted for quite sometimes.

FUNDAMENTALS

The Budget Deficit is out of control
The government is going to increase taxes which in turn will reduce the  economy expansion
The RBA might lower its cash interest rate.
The Rating Agencies might decide to downgrade the government debt.
China might slow down further

TECHNICAL SETUP

The present rally could soon end by approaching the area of resistance at 1.0351-1.0366. Then, a new downtrend might follow

PROGRESSIVE TARGETS: 0.9788, 0.9386, 0.8516 and 0.8000


SITUATION

The Aussie at 1.0336 is now below the bunch of "displaced" moving averages (see weekly chart below) sitting together within a very narrow range. This usually happens just before the tempest.



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The  daily chart below shows a reversal candlestick in 5D and an unusual spike in the "volume of trades". Note: Even in case the currency pair reaches 1.040-1.0414 it will still be in bearish territory.


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The inverted Head & Shoulder in the 4-hour chart below may be stopped by the area of resistance at 1.0351-1.0366 or at 1.0385.


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See the 1-2-3 below (two-step pattern) in the 1-hour chart that could potentially stop the pair and point "3" (in blue).

Note the reversal engulfing pattern at point "3" and the "wave oscillator" alerting to exit the long position (black vertical line)


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