After meeting resistance earlier in the week at a key 50 percent retracement level at 1.0517, the June Australian Dollar formed a secondary lower-top, triggering the start of a new down move.
Not only did the Australian Dollar break through a previous main bottom at 1.0314, but it also took out a long-term uptrending Gann angle from the November 23 bottom at .9496. This angle comes in at 1.0296 today.
Based on the major range of .9496 to 1.0720, the Australian Dollar could be headed toward a 50 to 61.8 percent retracement of this range. This makes 1.0108 to .9964 the next potential downside target zone. There is no price and time set up with a Gann angle so the timing of this break is difficult to predict. However, the main swing chart may offer us some insight.
The first break from the February 29 top at 1.0720 to the March 14 bottom was .0406 in 11 market sessions. Taking the most recent main top at 1.0529 and subtracting .0406 yields a price target of 1.0123. Since the 1.0529 top was created on March 19, an 11-session break makes April 2 a key balancing date. Should the market continue on its current slide, traders should look for a move to 1.0123 on April 2. Reaching this price level before the date will mean that price is ahead of time. Additionally, should the date pass without reaching this price target then consider the market to be stronger than forecast.
Fundamentally, an economic slowdown in China and the lack of demand for higher yielding assets are two reasons why the Australian Dollar is trading weaker. Technically, the main trend is down and likely to continue to weaken further. Now that a major Gann angle has been pierced, short-traders should look for the down move to continue with 1.0123 the next likely target over the next week and a half.
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Australian Dollar On Course For Further Decline
Published 03/22/2012, 08:19 AM
Updated 05/14/2017, 06:45 AM
Australian Dollar On Course For Further Decline
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