JDFN Financial Network

Will Australian Dollar finally break through parity?

Australian Dollar just pierced this week November 2009 high of 0.9404, advancing well above the 80% retracement mark on the last and deep weekly swing low.

This swing itself was a 76.4% retracement on previous move from early 2001 all-time lows at 0.4773 to july 2008 all-time highs at 0.9847, and ended at 0.6006 on october 2008.

Although this is a longer term view, the present monthly levels would suggest an attempt to test the highs and probably keep climbing on to reach the upper line of the rising triangle and then further to the pitchfork channel. The coincidence of these levels with the 127 / 138.2 fibonacci extensions on last swing low, also merging with 127 extension of previous swing high at about 1.1180 gives me a probable first target area at around 1.0800 / 1.1000 if all-time highs are broken.

We still have to wait for a valid confirmation of this week's breakout of 0.9404, which by now hasn't yet held as support. Also, let's note that 0.9500 forms a strong resistance level, having been tested both sides in the first half of year 2008, so even if it is meant to retrace, the Aussie could gather enough momentum to push forward and reach the round number.

From a bearish point of view, the rejection from the highs will be forming a triple top and I would be expecting a retracement to the 38.2-50% area as primary target, with a further bounce up from the median pitchfork, and if broken, a descent to the 61.8% level.

Bullish levels on breakout
0.9500 strong resistance and round number
0.9700 intermediate psychological level
0.9847 double-top
1.0330 upper line of the rising triangle channel
1.0860 / 1.1000 upper line of the pitchfork channel and 127% extension

Bearish levels of retracement from triple top
0.8920 38.2%
0.8760 50%
0.8600 61.8%

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