Aug 03 2010
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The U.S. dollar is moving lower for some time now, driven by higher equity and commodity market, especially oil, which reached 82-83 dollars per barrel recently, and rose for almost $4 since Sunday open. Technically, oil moved into a powerfully Fibonacci resistance level, 76.4% retracement area of a previous decline (87.10-67.00), where usually a choppy and corrective structure reverses.
On the daily chart shown below, an upward structure from 67 region is very complex wave II, counted as double zig-zag move, which should be extremely near completion. Move to 83.50 is possible, before prices collapse.
We are also looking for a top of an upward zig-zag formation on the S&P 500, which seems to be trading in final stages of a current up-trend. One hour chart shows that a red wave 5), final sub-wave of wave (NYSE:C) of a larger wave II, is underway, and will probably test the 1130-1140 resistance region in the coming sessions. Traders will watch this level very carefully, from where a technical bounce on the down-side may easily appear.
A recent intra-day price action suggests that a red wave 5) from one hour chart is not finished yet. Wave five is a motive wave, which means it should be structured by five sub-waves, before trend is completed. As such, at least one more push higher should be seen in the near-term; with a black wave 5 to come.
So, if S&P and Oil up-trends are near completion, then top on Aud/Usd should also be very near. In fact, Australian dollar is also trading in final bullish wave against the U.S. dollar as shown on the chart below. However, be careful on that one for now, as we may see test of 0.9200 zone, before a turning point can be seen. See you soon. Grega H.
Disclosure: no pos.