I still convinced that we are looking at a double correction, where the first correction was a flat and the second is a zig-zag. As we are closing in at the next target area near 91.85-92.00.Wave C2 will be equal in length at 91.85 and the resistance line will come in near 92.00. There is a possibility of a extension higher to 92.30 - 92.40, but that should be it and at least set the stages of a decline to 89.02. My preferred picture is that a important top is close by and we should see a much deeper decline in wave 3 of [C] down.
I'm open (short) in this trade, and it's certainly turning out to be far more complex than we would have anticipated! I think we could still move higher into the 1040/50 zone on S&P, so most likely that would mean some more upside for this pair - I think it might get pushed it sharply past the 92 zone to knock out a bunch of stops, and then maybe retreat a little. Certainly this top is trying to make a fool out of us :)
ReplyDeleteHi Mimi
ReplyDeleteAs you have mentioned before, the correlation between S&P 500 and AUD/USD cross is very high so all calls for a top in AUD/USD is a call, where one easily could end up being called a fool.
Looking at the correlation again I do think that the AUD/USD cross is a bit ahead of itself and therefore there should be room for a move up in S&P 500 without AUD/USD doing much and maybe even forming a top.
I do think that we are presented with a new low risk high gain possibility at these levels. I would sell AUD ag. USD useing a stop at 92.25 looking for a break below 90.68, which should be first indication that a top is in place.
Hi,
ReplyDeleteI have slightly different perspective for the correction in AUD|USD, but the conclusion is same as yours - "Sell AUD" - http://ewforecasting.blogspot.com/2010/08/audusd-painful-topping-process.html