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Earlier Australian Dollar Outlooks

 

Outlook: Australian Dollar (AUD/USD)

Will the AUD avoid a drop to 0.6900?

October 30, 2005

AUD chart for October 2005


The drop to 0.7368 in July breached channel support. Although the breach was not sustained, subsequent rises have not taken the Aussie back through the minor high that preceded the breach. It is a warning that the Aussie is preparing to drop into the lower channel.

A break of 0.7368 will confirm it and the Aussie should fall back to the next channel support at 0.6950.

For the time being the Aussie is attempting to hold the immediate channel support. Wave structures suggest some more upward action will be seen from current levels and that the last minor high at 0.7810 can be exceeded.

However, the time cycle generated at the start of the trend, rolls over in November. That means a change of trend. It is quite feasible for the Aussie to rise briefly through 0.7810 by November then turn downwards sharply and trigger a new decline. The Aussie will need to generate considerable upward momentum above 0.7810 to give it a chance to return to 0.7990 and perhaps extend the rally to around 0.8200.

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