Skip to main menu | Skip to content
spider trap - please do not go here or you will be locked out of this site

Outlook: Australian Dollar (AUD/USD)

Unfolding triangle pattern to delay upward break

September 17, 2006

Chart of outlook for AUD/USD as at 15 Sept 2006

By respecting long-term channel support around 0.7015 in March, the Aussie signalled that the long-term rally is still in progress. Eventually the Aussie will rally through 0.8010 and trend towards 1.0000. However, it is unclear when the break will be made.

It is tempting to assume that it will rally to a new high immediately, particularly with monthly-based momentum moving higher again. However, another option to be considered is that a large-scale triangle pattern is developing. The current rally is just the 4th leg of this pattern. Consequently, it should not exceed the previous major high at 0.7990 and make another substantial drop – although not back to 0.7015.

The triangle option is attractive as it will offset the shallow and brief retracements witnessed in the years 2001 through to 2003. It will also prepare a good base for another aggressive rise. But the triangle option suggests that 0.7990 will not be exceeded by the current rally.

The current rally has stalled around a long-term channel resistance, so there is scope for some downward action in the weeks ahead. But how far the Aussie may drop is not clear either. A pennant consolidation with a low around 0.7400 should not be discounted. The standard objective for the corrective decline from 0.7792 is 0.7200.

A time vibration is rolling over now, so the corrective drop should end soon. The next rise may take till the next vibration rolls over in February. However, the next rally may repeat the speed of April and May so that the test of 0.7950 can come sooner. The final leg of the triangle should then take till July-September to reach a maximum of 0.7200.

Of course a strong rise through 0.8010 at any time will signal that the next stage higher of the long-term upward trend is unfolding.

Comments:

Make a comment

The Chart Manager is produced by Stafford Blue Pty Ltd ACN 30 114 110 173. The recommendations contained in this publication are of a general advice nature and are prepared without consideration to any subscriber's particular financial situation. Before acting on the recommendations contained herein, subscribers should consider the relevance of these recommendations to their own financial situation, and if necessary, seek independent professional advice. The analysis and recommendations contained in this report are derived solely from the application of technical analysis techniques. Stafford Blue Pty Ltd believes that the information is this report is correct and opinions, conclusions and recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, Stafford Blue Pty Ltd and its employees do not accept liability to any person for loss or damage arising from the use of this report.