Sive Morten
Special Consultant to the FPA
- Messages
- 18,571
Today, guys we will take a look at gold-related currency instead of looking at gold directly. Mostly because on gold we have the same picture as last week and the same patterns are still forming, including 3-Drive pattern on intraday charts. That's why today AUD will be in focus:
Fundamentals
(Reuters) - Australian shares rose to their best level in nearly 10 years on Thursday, with miners and healthcare stocks at the forefront as solid gains on Wall Street and strong oil prices also inspired buying in the region.
The S&P/ASX 200 index rose as much as 0.5 percent to 6,102.2, its highest since January 2008. The benchmark had risen 0.2 percent on Wednesday.
Aussie shares were propped up by miner BHP Billiton , which also has a large exposure to oil, and Woodside Petroleum, after oil prices shot through the roof over escalating tensions in Iran, a major oil and gas producer.
“What’s going on here is that geopolitics is back in play as a result of the proxy war between the Saudis and Iranians across the region,” Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note.
“But geopolitics has become a bigger factor now that the Iranian protest movement has launched into the open in the past week.”
BHP rose advanced 1.4 percent to its highest since May, 2015, and was headed for its eighth straight session of gains, while Woodside surged to a near two-and-a-half year high.
The Australian energy index climbed as much as 1 percent to its highest since July, 2015.
COT Report
It is very curious situation with futures positions on AUD. Chart shows that investors have closed massive volume of long positions right before Christmas holidays. At the same time, Australian economy shows very good statistics of export, equity market stands on upside rally. This drop of speculative positions looks a bit curious, if of course, this is not just some technical portfolios rebalancing.
Whatever it is, after holidays this process continues. Last three weeks we see that position has turned to negative and open interest is rising. This simple combination tells that more and more new short positions were opened recently.
In last research we've talked that some deep retracement should happen sooner rather than later. And this change in AUD sentiment mostly agrees with this suggestion. So, may be indeed, we will get some reaction on coming 1-2 weeks:
Technical
Monthly
Monthly chart has not changed much since our last view. Our major bullish grabber pattern here is still valid. In January AUD slowly but continues upward action.
Construction here stands rather simple and I like when this happens. We will not take a look at some long-term tools here, such as far Fib resistance levels, big AB-CD, but will focus only on 2-3 month perspective.
After long-term drop market has reached Agreement at major all-time 5/8 Fib support of 0.7180 Fib level. Now market is forming a kind of flag action, and we're mostly interested in action inside the flag. Here we have AB-CD pattern that has not quite reached OP target. Now, right at flag's support line AUD has formed bullish grabber.
This grabber totally agrees with idea of uncompleted AB-CD target. Thus, monthly chart lets us estimate major points of trading plan - invalidation point @ 0.75 and potential target @ 0.8160
Weekly
Monthly setup suggests that we should find some chance to take long position, somewhere inside grabber's candle.
AUD shows impressive weekly performance, starting with steep "222" Buy pattern. Last time we thought that may be we will get some pullback around 3/8 Fib level and MPP. But price has passed through it as it doesn't exist.
Now we have second level on horizon - 5/8 major one and MPR1. Trend has turned bullish and market is not at overbought, so within 1-2 sessions price should hit 0.7885-0.7920 resistance.
Combining technical barrier and sentiment weakness let's us suggest that chances on retracement out from this level looks solid:
Daily
On daily chart we have two major levels. First one is 0.79. It is as MPR1 as natural resistance area. In fact here market keeps some harmony action a kind of reverse H&S. Of course, shoulders are too small to call it as H&S, but shape stands the same.
Second one is 0.7730. This is the bottom of potential left shoulder by harmonic analysis. Also it coincides with major 3/8 Fib support area.
Another tool that could generate additional patterns is DiNapoli upward thrust. It stands perfect, and in current environment appearing of B&B "Buy" around 0.7730 would be just perfect.
At the same time, as AUD right now shows "V"-shape of reversal, and has shown no deep retracement yet, although some strong levels were broken already, odds of deep retracement increases significantly. Especially on a background of recent CFTC data. That's why we do not exclude chances that as B&B trade will be completed we could get deeper AB-CD action, before market will continue monthly trend.
The same conclusion we've done yesterday from EUR and DXY analysis. Thus, AUD could follow major FX market trend.
Intraday
On hourly chart we do not have a lot of issues that we could stick with. Market shows very smooth upside action. More or less reliable AB-CD that is based on "222" Buy pattern is shown on the chart.
This ab-cd shows XOP target at the same 0.79 area. We do not have any other patterns yet here. May be AUD will form something as soon as price will reach daily target.
Conclusion:
AUD has positive fundamental background. CFTC data shows bearish sentiment that agrees with our idea of possible retracement. Technical analysis points that it should start somewhere from 0.79 area as major resistance level will be met.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
Fundamentals
(Reuters) - Australian shares rose to their best level in nearly 10 years on Thursday, with miners and healthcare stocks at the forefront as solid gains on Wall Street and strong oil prices also inspired buying in the region.
The S&P/ASX 200 index rose as much as 0.5 percent to 6,102.2, its highest since January 2008. The benchmark had risen 0.2 percent on Wednesday.
Aussie shares were propped up by miner BHP Billiton , which also has a large exposure to oil, and Woodside Petroleum, after oil prices shot through the roof over escalating tensions in Iran, a major oil and gas producer.
“What’s going on here is that geopolitics is back in play as a result of the proxy war between the Saudis and Iranians across the region,” Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note.
“But geopolitics has become a bigger factor now that the Iranian protest movement has launched into the open in the past week.”
BHP rose advanced 1.4 percent to its highest since May, 2015, and was headed for its eighth straight session of gains, while Woodside surged to a near two-and-a-half year high.
The Australian energy index climbed as much as 1 percent to its highest since July, 2015.
COT Report
It is very curious situation with futures positions on AUD. Chart shows that investors have closed massive volume of long positions right before Christmas holidays. At the same time, Australian economy shows very good statistics of export, equity market stands on upside rally. This drop of speculative positions looks a bit curious, if of course, this is not just some technical portfolios rebalancing.
Whatever it is, after holidays this process continues. Last three weeks we see that position has turned to negative and open interest is rising. This simple combination tells that more and more new short positions were opened recently.
In last research we've talked that some deep retracement should happen sooner rather than later. And this change in AUD sentiment mostly agrees with this suggestion. So, may be indeed, we will get some reaction on coming 1-2 weeks:
Technical
Monthly
Monthly chart has not changed much since our last view. Our major bullish grabber pattern here is still valid. In January AUD slowly but continues upward action.
Construction here stands rather simple and I like when this happens. We will not take a look at some long-term tools here, such as far Fib resistance levels, big AB-CD, but will focus only on 2-3 month perspective.
After long-term drop market has reached Agreement at major all-time 5/8 Fib support of 0.7180 Fib level. Now market is forming a kind of flag action, and we're mostly interested in action inside the flag. Here we have AB-CD pattern that has not quite reached OP target. Now, right at flag's support line AUD has formed bullish grabber.
This grabber totally agrees with idea of uncompleted AB-CD target. Thus, monthly chart lets us estimate major points of trading plan - invalidation point @ 0.75 and potential target @ 0.8160
Weekly
Monthly setup suggests that we should find some chance to take long position, somewhere inside grabber's candle.
AUD shows impressive weekly performance, starting with steep "222" Buy pattern. Last time we thought that may be we will get some pullback around 3/8 Fib level and MPP. But price has passed through it as it doesn't exist.
Now we have second level on horizon - 5/8 major one and MPR1. Trend has turned bullish and market is not at overbought, so within 1-2 sessions price should hit 0.7885-0.7920 resistance.
Combining technical barrier and sentiment weakness let's us suggest that chances on retracement out from this level looks solid:
Daily
On daily chart we have two major levels. First one is 0.79. It is as MPR1 as natural resistance area. In fact here market keeps some harmony action a kind of reverse H&S. Of course, shoulders are too small to call it as H&S, but shape stands the same.
Second one is 0.7730. This is the bottom of potential left shoulder by harmonic analysis. Also it coincides with major 3/8 Fib support area.
Another tool that could generate additional patterns is DiNapoli upward thrust. It stands perfect, and in current environment appearing of B&B "Buy" around 0.7730 would be just perfect.
At the same time, as AUD right now shows "V"-shape of reversal, and has shown no deep retracement yet, although some strong levels were broken already, odds of deep retracement increases significantly. Especially on a background of recent CFTC data. That's why we do not exclude chances that as B&B trade will be completed we could get deeper AB-CD action, before market will continue monthly trend.
The same conclusion we've done yesterday from EUR and DXY analysis. Thus, AUD could follow major FX market trend.
Intraday
On hourly chart we do not have a lot of issues that we could stick with. Market shows very smooth upside action. More or less reliable AB-CD that is based on "222" Buy pattern is shown on the chart.
This ab-cd shows XOP target at the same 0.79 area. We do not have any other patterns yet here. May be AUD will form something as soon as price will reach daily target.
Conclusion:
AUD has positive fundamental background. CFTC data shows bearish sentiment that agrees with our idea of possible retracement. Technical analysis points that it should start somewhere from 0.79 area as major resistance level will be met.
The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.