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AUD/USD Visual Trading Update

By:

Moshe Shalom

2010-09-02 13:33:31 GMT

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Current Trading Plan:

Position: OUT
Last (29-01-2010) Closed position at 0.8930 (-115 Pips)
Long: --
Short: --
Exit by Stop Loss: --

Technical Indicators Notes:

Last time we said: "The price move of Friday did create a temporary bottom and the small break up of the inside steep channel is telling us that we have some kind of correction going on. In our opinion it is too soon to position either way: LONG has a very bad risk-ratio if you consider the obvious target as the wide channel upper boundary and the RSI-STOC combination already in the middle of the way.

On the other hand, the pair has not given us enough data to place a SHORT (HH-HL), besides under the 0.8550 support area. This is too far anyway. We think that the meeting point between the incoming upper Bollinger band, upper channel boundary and incoming price from below, will be the trigger to the downside."

This is a general comment for nearly all assets, because they are correlated to the core. Dubai, Obama's war on the banks (Wolker "rule"), and finally, the European Union woes (Portugal, Italy, Greece, Spain) were the bricks for the creation of the trigger to the next leg of the financial crisis. Apparently, the politicians did feel, at the end of last year, that the economic situation was good enough to start bashing the scapegoat (Financial institutions), after telling us, for a while, that the worst was behind us.

We think it's not. For some time, we feel that the move from March 2009 was a bear market rally (no big news there…), but when the S&P500 eventually followed the EURO, in the general move of USD-Carry-trade-position-deleveraging, we had a grand scale confirmation of our opinion.

The initial suspicion came to us, when for every good piece of news we got in the real economic front; we saw a rise in the Dollar and a drop in its anti-assets.

We now see the trend as down, and the medium-long term Elliott count map, towards a low near the March lows or worse. Going by this scenario, prices in the equity, commodities and anti-dollar currencies, have created the initial stages of the descent. In some, like the EUR/USD, we can see better the short-term Elliott Waves, but the overall direction is the same.

Why the EUR/USD is better mapped? Because it is the base of the current crisis stage. The need for closing the deficits was pressed the hardest there, while in the UK, US and Japan, monetary and fiscal policies could be sidelined for a bit more time.

In short, we have a short bias for the assets that we cover (AUD, EUR, JPY, GOLD, OIL, S&P500), and we want to enter when identifying highs reversals.

The red trend line is our current guideline to enter sub-wave 3 of wave 3 (Look at the EUR/USD for our detailed view.) In every asset the RSI-STOC combination is different, the MACD and ATR are in different locations, points to a different volatility status. But, we strongly believe, that the correlations are stronger than the exact technical situation.

Our initial red line is placed as a guideline. The exact entry level, will be defined later, when it will be obvious that most of the current corrective phase upward, has been performed.

Charts Legend:

In Price Window:

Simple Moving Average (20): Green
Bollinger Bands (20,2): Violet
Support & Resistance price areas: Pink and Light Green areas
Trend lines and Channel Boundaries: Blue
Elliott Waves Counts: Black and Blue numbers

In Indicators Part:
RSI (10): Blue, STOC(5,3,3): Green, ATR(5): Blue
MACD (12,26,9): Blue, Signal: Red, Histogram: Green
Indicator trend lines and effects: Magenta

Signals:

Long: Above the Green line
Short: Below the Red line
Exit position: On crossing the Cyan line
SL in case of triggered level: Dashed Cyan Line

Green Wave Capital LTD (c) INFO@GreenWaveCap.com

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Content Provided by:

Moshe Shalom
CIO Green Wave Capital Inc, [INFO@GreenWaveCap.com] For the last 25, I have been involved in many of the aspects of the Financial Markets, while lately I concentrate on the implementation and education of Technical Analysis trading techniques, for private and coorporate clients.

Disclaimer:
By no means do any part of this analysis recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this analysis was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.

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