AUD/USD: Up then Up ... or Up then Down?


The Australian dollar is rocking and rolling. The move is very much in line with our expectations in the analysis we provided last week and the week before. And, as I see it, there are two possible scenarios once AUD/USD hits the $0.9330 level ...

To teach what we preach, the first Aussie chart shows the near-term 61.8% Fibonacci retracement target. That retracement is accompanied by a nearer-term 100% Fibonacci extension level. Basically, that confluence of Fibs is likely to pose at least some resistance:

After that level is achieved, I see two potential outcomes (based on Fibonacci levels.)

Outcome #1: UP

Lending credence to this view, the end of the Aussie's strong downside move this year represented a 61.8% extension. In other words: the Aussie may have higher to climb in order to sufficiently retrace this larger decline:

But there is potential for the Aussie's drop to continue (especially if you want to think about it in the context of our expectations for a rising US dollar too) ...

Outcome #2: DOWN

Rather than a third-wave extension of just 61.8%, the Aussie may embark on a third wave that extends at least 100% of the larger third wave down:

Granted, these are longer-term setups we're looking at here. Maybe you trade forex in these time frames; or maybe you don't.

One could use the CurrencyShares Australian dollar Trust (symbol FXA) to take these sort of positions. Or one might consider managing shorter-term trades based on the key Fibonacci levels within these larger setups.

In fact, I know that's how Jack prefers to play it.

He uses these Fibonacci levels and modified Elliott Wave in short-term time frames to make profitable decisions for his BSFX members. Wanna be one? Subscribe here ...






Alley-oop: Aussie up!

I could tell you this article is an alley-oop, that buying the Australian dollar right now is a slam dunk.

But then I'd be sounding much too certain for my own good (and yours.) So consider this a regular chart setup with lots of rationales suggesting the Aussie could shoot higher by nearly 4% from current levels.

First, here is a chart from Jack. (It should give you a good idea of the key levels he's monnitoring for members of his Black Swan Forex trading service. If you're interested in a FREE WEEK of his trade alerts and analysis, click here.)

Jack's looking for a c-wave move at least reaching high enough to test the AUD/USD 0.9317 level ... and then a potential extension that could reach the next swing high at 0.9664

I, obviously, agree the Aussie's direction will be higher if it can hold trendline resistance (inverted head-and-shoulders neckline) it's testing today. What's intriguing is that so many indicators -- specifically the targets generated by those indicators -- are converging at pretty much the same spot on a chart: AUD/USD @ 0.9525

Many targets converging at AUD/USD 0.9525

Here are those three targets:

1) A c-wave extension measuring right on 161.8% Fibonacci retracement

2) A 38.2% Fibonacci retracement of April to August downtrend

3) An inverted head-and-shoulders projection of about 3.75%

If you're already trading Forex, you can use AUD/USD to play this idea. If not, you could use shares or call options on the CurrencyShares Australian dollar Trust (FXA).

Good luck.


-JR Crooks



Dow Theory: Non-confirmation Warning with Aussie and Transports?

repetition“The game does not change and neither does human nature.”          

-Jesse Livermore

From the classic, Dow Theory, by Robert Rhea, 1932: :  

The movement of both the railroad and industrial stock averages should always be considered together. The movement of one price average must be confirmed by the other before reliable inferences may be drawn. Conclusions based upon the movement of one average, unconfirmed by the other, are almost certain to prove misleading.  

The most useful part of the Dow theory, and the part that must never be forgotten for even a day, is the fact that no price movement is worthy of consideration unless the movement is confirmed by both averages.  

022212 dow theory

Adding one more risk asset to the picture—Aussie-USD (brown line in chart below); it isn’t confirming either ...

022212 dow theory aud

... and the game plays on ...