Australia, Canada and Gold Medium-Term Overview – Dec. 5-10, 2010

The following table presents the Supports, Resistances and Risk-to-Reward forecasts obtained with the Forex AI platform calculator, for the Australian and Canadian Dollar plus Gold, versus the American Dollar. You will also find a Medium-Term Overview for this week along with the Weekly and Daily charts for USDCAD, AUDUSD and XAUUSD (Gold).

The Loonie pair has been trading in a tight weekly consolidation range, barely above parity. It has reached the 138.2% Fibonacci extension from previous swing low in the first half of year 2009, and there could still be potential to a further continuation down to the 161.8% extension at around 0.9400 if it breaks below the lowest lows. On the upside, this pair should break a strong resistance at 1.0800 to be considered bullish, with a first long term target at 1.1650/1.1700.

Australian Dollar is still on the rise and the last swing high forms an expanding bullish channel on weekly charts, however the bigger channel in which it is inscribed seems to be slowly turning into a rising wedge. There is still room for a break of last highs and a run in extension (from the previous swing high that ended near 0.9450) to at least 1.0300. A retracement to the lower trend line of the ascending channel is though possible, but would probably find a serious support at 0.9450/0.9400 area, nearly a 38.2% Fibonacci level.

Gold looks still strongly bullish on the weekly charts, but the steep angle of the run calls for a correction soon, where it probably will retest the last break at around psychological level 1300.00. Next bearish targets if the level doesn’t hold as support, will be on the previous rising lower trendline, in the area comprised between the 38.2% and 50% Fibonacci retracement levels.

Daily outlook at the moment of the analysis shows us the prices are about to break the highs and if this occurs, we can expect a rally in extension to around psychological level 1500, where it will most probably rebound back down in this first attempt but should be retested thereafter as this level has been an important target among traders since Gold started its persistent rally in year 2006. If this scenario plays out, I think the pair might then consolidate for a while and try to sustain the gains on a new level towards higher realms.