Welcome back to the daily blog!
For those of how visited it yesterday, we did a great top down analysis on the XAUUSD. And our XAUUSD analysis of yesterday is proving itself correct. In that article we expected a correction to the upside to retest the top of 1.695. Gold is indeed moving up. Actually in a very impulsive manner. Maybe too impulsive? Let us take a look!
The move back up can and should be deep, but may not break the 1,695 level. If it does, the EW is invalidated and the count is wrong. In that case the move down was part of a correction at a larger degree. However, if I analyze that scenario, it does seem likely to me that the 1695 level will hold and a continuation of the down move will happen. Only time will tell if that indeed is true.
Before breaking the top we have possible resistance points at the price levels of 1685 and 1690. At 1685 we see a 786 retracement Fib an d a -1 Fib target. At 1690 we see an 886 Fib retracement Fib and a -1.272 Fib target. Those levels could be a key area for either a reversal back to the downside or as a stalling point for the unplanned up move.
One element of worry for the down side continuation is the impulsive character of the move up. There is no end in sight of the steam and energy on this currency on the shorter time frames so waiting for a price action reversal signal before attempting to put the feat into the waters is always a smart idea of course. If you are looking for a Forex Power indicator, please click here.
We will monitor this setup closely for such signs.
Otherwise the charts have quite some movements today. Of course the EURO was one of the big movers – again. That currency gave some opportunity to enter trades during the Asian and London session. Big movers were the EURAUD, EURJPY and the EURGBP, EURUSD also had their fair share of movements. If you were ever in need of a Forex trade finder, then please click here for more information.
Those trade setups and possibilities are now a thing of the past and are well on their way. Let us focus on a currency were we have the opportunity to catch sometime soon in the future. The currency that seems interestingly setup at the moment is the AUDUSD.
To be honest I have not touched the AUDUSD for a while now. It has behaved very choppy lately and is just bouncing uncontrollably up and down for months in a row. However at the moment, the AUDUSD made a strong impulse down which brought it back to the bottom of a significant day trend up channel. I see the following opportunities.
The Aussie upside looks interesting once we break the current top at around 1.0470. We have plenty of space back to the top at the 1.06 area.
The downside could also have some potential when do NOT break the top at 1.0470. If we see price action reversal patterns close a Fib of the last move down, then it could be worth an attempt from my side to break the bottom. A break of the bottom and a hook back might be another option or scale-in but that is a bit further away from now.
As always, good trading!