Strategy 18 September 2013

Foreign Exchange

AUD/USD strength remains corrective only

The rebound seen from the end of August from the .8848/93 supports has been fairly solid, but remains well within the confines of a correction only. The rally will shortly encounter the previous break down point at .9388/.9404. This represents the November 2009 high, the April 2010 high and the October 2011 low, it is considered to be tough resistance and our favoured view is that we will see failure between here and the 0.9510/38.2% retracement of the move that we have seen this year so far.

We note that the daily chart is suggesting that the sideways to higher corrective move which has been evident since the beginning of August is in fact an ‘a-b-c’ correction which is nearing completion. We do have a another Elliot wave count on the weekly chart, which suggests that the correction could reach the 50% retracement resistance at .9715, however this is less favoured.
Longer term the market completed a large top in June 2013 (1.1080-.9388), which offers a downside measured target to approximately 0.7700. This top and target will remain entrenched while capped by the 0.9715 resistance.
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