CAD, Aussie and Gold Weekly Update and May 2011 Monthly Overview - April 29 close

USDCAD

May 2011 Overview

The Loonie broke the falling wedge to further downside after last month’s strong rejection of the upper bearish trend line. This leg could extend to match November 2007 lows at 0.9060/50 on a longer term but I think some correction is due to parity and slightly above, at 0.9920/30 up to 1.0170/1.0200. This pair has almost given back all the gains obtained between late 2007 and early 2009 and there are no clear signs yet of a recovery.

Given the extremely bearish tone of this pair and the break of the descending channel, I would favor an extension to the 127% and 138.2% daily Fibonacci levels, below 0.9400. Price has since regained the channel but there are no signs of bullish sentiment as to now. Daily double bottom could be confirmed if price remains above 0.9500. We would then be aiming to the middle line of the daily Bollinger bands and 38.2% Fibonacci retracement at around 0.9560 (actually quite near of the present levels) and further near the round number 0.9600, where the daily SMA34 is presently lying.

AUDUSD

May 2011 Overview

The Aussie broke the rising wedge to the upside and reached the 127% extension on its previous swing high. Our target of 1.1000 was attained and surpassed yesterday, making a new high at 1.1010. Although this pair is still bullish, according to this week’s price action we might be initiating a significative correction, presently trading around the 50% retracement level, with projection to the broken upper line of the former wedge at around 1.0580/1.0600. Further upside would bring us near 1.1250 but this time I think the correction can go deeper than expected.

I would favor a continuation of this week’s correction to retest the break at around 1.0780 as first target, then around 1.0620/00 at the daily middle line of the Bollinger bands with a strong support area just below around 1.0580. A deeper correction can find support at 1.0370 which is the daily SMA34 and 38.2% retracement on the previous swing high. Finally, we have another strong support area at the weekly middle line of the Bollinger bands, between 1.0200 and 1.0250. Then the bullish trend might look to resume back to the highs.

XAUUSD (GOLD)

May 2011 Overview

Gold finally reached and went above the longly waited for 1500.00 level, attaining 1570.00 during the last week of the month. It has now started a corrective move for a retest of the level as support from above, and seems aimed to reach next round number 1600.00 soon, which would be the 138.2% extension on the last monthly swing high. The ascending channel was broken and could be a good level for a retest, however a correction could extend to the lower trend line of the channel, in the 1450.00/1400.00 zone.

Gold reached above our expected levels of 1520.00/1530.00, and as to now has retraced back there. Next levels to the upside are 1575.00/1600.00, meanwhile the correction would bring the price to a retest of the break of the upper line of the weekly wedge, at 1500.00/1480.00. Further downside can go as low as 1400.00/1380.00 (weekly middle line of the Bollinger bands and SMA34) but there is good support at 1475.00, where price can take another impulse to reach the higher bullish levels.