CAD, Aussie and Gold Monthly Overview - April 2011

Weekly updates: April 08/12 close.

USDCAD

The Loonie continued falling on March though didn’t reach as low as expected (0.9400), making a new low at 0.9526 and closing higher (0.9586) after a 38.2% retracement on the last 4-hour swing low. Earlier this month we have been seeing a recovery and break above this level, making a spike to the 80% level yesterday and presently trading below the 50%, after a second push to the 61.8% Fibonacci retracement. I would favor on a longer term approach, a rise towards April 2010 lows at 0.9930 where we have strong resistance area between this level and 0.9980, repeatedly tested as support during the last quarter of year 2010. Should price break this resistance we have parity waiting barely above, at a 38.2% retracement on the monthly swing low, and as we have expressed in earlier analysis, I would expect a further bullish move towards the middle line of the Bollinger bands and 61.8% Fibonacci level at 1.0280.

The Daily charts ended last Friday with a pin bar that was confirmed on Monday, having pierced down and regressing to the lower trend line of the weekly channel, closing just above that level. Price is presently trading above the 4-hour SMA34 after a 50% correction on the 80% upwards push, and the expectations I have are for a continuation in the direction of the daily 50% Fibonacci retracement, at around 0.9680/90, which is also the 4-hour SMA100 level and the actual middle line of the daily Bollinger bands. In a second step, I would expect a rise to the daily SMA100 towards March highs and parity, but we could have a bounce back down and consolidation around the 61.8% retracement level and SMA34, at 0.9720 approximatively. We can see that this level presented a tight consolidation previously in March.

AUDUSD

The Australian Dollar keeps on the rise now better than ever, making new highs in March and closing above 1.0300. There is still room to further ascension inside the wedge, and it seems we will have to wait quite a bit for a real inversion of the trend on this pair, contrarily to my previous monthly appreciation. A projection to the 138.2% extension on this swing high gives us around 1.1000 and we are still far from the upper Bollinger bands. However, we have to be attentive to the sudden changes in sentiment as bearish corrections are usually and drastically fast on the Aussie. March highs were broken giving new succesive highs with barely a correction on the overall move up (much less than 23.6 after psychological numbers 1.0400 and 1.0500, and almost 23.6% now after reaching 1.0580 on Monday.

This seems to be the wave 3 on a second Elliott Wave bullish pattern on the Daily charts:

Now, if we apply a projection of an Andrew Pitchfork to the recent correction, we can see that we might have a retest of the broken rising trend line, around 1.0650, for a short wave 5 of group 2, towards the upper line of the descending projected Pitchfork, as price has been holding above the center line. If there is some further consolidation around the present levels (between 1.05 and 1.06) we could have an extension to build a longer wave 5 which could reach the 127% or 138.2% on the actual wave 3:

Targets seem to point up to 1.0600 and 1.0670/80 (127% and 138.2% extensions on the swing high). Wave 4 scope on a continuation of the bearish correction can reach the strong support area at around 1.0240/50 for a retest of the break of the previous daily highs and 38.2% retracement, if the middle Pitchfork line is broken. However we might as well remain with this small pullback at the 23.6% level to further rise to the above mentioned price areas, as at the moment we seem to have good support at 1.0480/1.0500 and are trading above the pivot. Today’s R2 is showing at around 1.0595. We will have to break 1.0530/35 R1 for a confirmation of the bullish run.

XAUUSD (GOLD)

March ended on a long-legged doji pattern for Gold, and subsequent price action seems to indicate we’re in for a consolidation period on this pair. Early this month it made a new high, and we could be slowly building a staircase to expected psychological level 1500.00 which seems so near and yet so far, given the time the price has spent in its previous range, although we are now back trading below Friday’s lows. Should support at 1450.00 give way, we would be aiming towards the lows at 1390.00/1400.00 in a first step.

Gold broke the upper line of the weekly rising wedge after a week of undecision, reaching the 138.2% Fibonacci extension of the previous swing high. Price is presently retesting the break and hovering around 1450.00. If the level holds, we will finally be heading to 1500.00, and on a bearish point of view, should the support fail we could be brought back to the middle line of the daily Bollinger bands in confluence with SMA34 at around 1425.00/1430.00, then later on a second step price could do a retest of the lows near psychological level 1400.00.