Pure Guesswork

A further update on a pattern noted last Wednesday, January 6, and yesterday.

Once again the AUDUSD has bumped up against resistance around the 0.9326 level, the high which was made in late October.

This is the second time this week that an attempt to break this level has found sellers. This can be seen in greater detail on an hourly chart:

I would suggest that this level around 0.9320 -- 0.9330 is a more important resistance level than the higher high which was made in mid-November around 0.9400. The November high, though higher by 70 pips or so than the October high, was part of an irregular correction. The October high was the culmination of an impulsive move which I believe leaves a deeper psychological imprint on the market. If today or tomorrow the AUDUSD succeeds in breaking through that 0.9326 level in a convincing way, I do not believe the 0.9400 level will provide serious resistance. If, however, we see more downside action today, the notion that we are forming a significiant head and shoulders pattern in the AUDUSD should be taken more seriously.

Posted by Pure Guesswork at 8:19 AM | Permalink | Comments (0) | TrackBacks (0)

Going back to a post from a week ago, there were these chart showing an impulsive move up and a 3 wave correction to this move.

And:
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Since that time the rally from the end of the 3 wave correction carried on rather convincingly until it got to the level of the initial impulsive top (from late October of last year). It found convincing resistance there.

Posted by Pure Guesswork at 8:44 AM | Permalink | Comments (0) | TrackBacks (0)

An alpha-beta-delta impulsive up move in October 2009, ending within one pip of the 2.618 target.

Here's how it played out:

• An alpha high at 0.8857 on October 1, then a beta low the following day at 0.8566, creating an alpha-beta base of 291 pips.
• 2.618 times that 291 pips would call for an impulsive rally of aprroximately 761 pips.
• On October 21 AUDUSD tops out at 0.9326, 760 pips above the beta low.

After that October 21 high we entered a long corrective period which possibly ended right before Christmas with a low on December 23 of 0.8732.

Two observations about that long corrective period:--

• First, it unfolded in a 3 wave pattern, with a slightly irregular Y (or B) wave. The last down wave (Z) ended on December 23. It was 10 pips shy of 1.618 times the first down wave (X).

• And second, the entire X-Y-Z corrective move retraced 78.6% of the impulsive move of October (within 3 pips).

Since the December 23 low we have seen a significant rally, retracing aprroximately 61.8% of the final Z down wave. But there will be no clear pattern until we see how any retracement of that rally unfolds.

Posted by Pure Guesswork at 7:22 AM | Permalink | Comments (0) | TrackBacks (0)

Just to be contrary--are we at a significant point of resistance in AUDUSD?

We are right at a potential 2.618 Fibonacci extension of a base built at the beginning of the year.

And an interesting dog which did not bark today is the AUD yield curve. The reaction to the surprise rate hike of the RBA has been a big nothing. Whatever expectations the market had of future rates, today's hike has not seemed to change them. Some longer dated issues actually came down in yield.

Posted by Pure Guesswork at 10:44 AM | Permalink | Comments (0) | TrackBacks (0)

As an imaginative exercise, counting the waves in a daily AUDUSD chart.

In this suggested pattern, 3 waves of a classic 5 wave pattern have completed themselves, and we are in the midst of the 4th wave. One "rule" of Elliott would imply looking for this 4th wave to end somewhere in the region of the 4th wave of lesser magnitude--which would put the projected low somewhere below 0.7800 (but above 0.7700). Then we would be off to the races, with a new upthrust taking out Wednesday's high.

In this chart one can see that the suggested wave 3 pattern is almost exactly 1.618 times the length of wave 1.

But wait--there is another pattern which could be suggested. This pattern would show a completed 5 wave pattern. Projecting the length of wave 1 down from Wednesday's top, one finds the lows of May 18th, which could be seen as the start of wave 5 (and thus the end of wave 4). Wave 5 = wave 1? Well, yes, that would correspond with a tenet of Mr. Elliott's theory. But, oh dear, that would make wave 3 the shortest of the 3 uptrending waves--and I believe that is something he said could never happen.

Oh well, as Emily Latella (and Kurt Cobain) used to say, "Never mind."

Posted by Pure Guesswork at 7:19 AM | Permalink | Comments (0) | TrackBacks (0)

Updating a pattern charted three weeks ago, AUDUSD has hit a (very) extended target. Perhaps due for some pullback here.

Posted by Pure Guesswork at 10:34 AM | Permalink | Comments (0) | TrackBacks (0)

An initial rejection at the 2.618 delta level yesterday morning. Today the markets seem to want to retest that level. If that resistance does not hold, the next target for this pattern would be 0.80.

Posted by Pure Guesswork at 7:25 AM | Permalink | Comments (0) | TrackBacks (0)

This pattern, explored in April 3 post, posited a target high at 0.7336. The actual high on April 13 was about 10 pips short of that.

Looking after the fact at this pattern we see an alpha-beta base formed on the last day of March between 0.6968 and 0.6854. Thefirst wave of a 3 wave impulsive move that followed moved quickly through the 1.618 and 2.618 targets, fading around the 3.33 minor Fibonacci level. This set up a probable move toward the 4.236 target after a pullback. The pullback ended at the 1.618 level, with the final wave ending--as noted--about 10 pips short of the theoretical target.

Looking at the entire impulsive move, we see that following the top we pulled back first 38.2% of the impulsive move (from beta low to delta 4.236 high). That corresponded to the original 2.618 target. Then today it retraced a full 61.8% of the original impulsive move, finding support (for now) at the original 1.618 target.

One last chart to show a possible A-B-C correction of the impulsive move, with the C wave ending 1.618 times below the original A wave.

Posted by Pure Guesswork at 9:19 AM | Permalink | Comments (0) | TrackBacks (0)

While the longer term pattern in AUDUSD is uncertain, there is a clear impulsive pattern working out on the hourly chart this week.

• After a low on Monday, March 30, the market formed an alpha-beta base with 3 waves up, then 3 wave down, the beta low coming at 0.6854 on Tuesday evening (NY time), i.e., just as the Wednesday Asian session was setting up.
• By Wednesday afternoon (NY time), April 1, there was some resistance forming right below the 1.272 intermediate Fibonacci level.
• The next resistance was around the 1.618 initial delta target. Then in London's Thursday morning session that level was broken
• The classic target for an impulsive move of this sort is 2.618 times the alpha-beta base. However, in this case, that level did not signal an end to the move. Rather it has become a center of gravity around which the market has been trading. Since crossing this level the market has traded roughly bordered by the 2 intermediate levels to each side of 2.618 (2.058 & 3.33).

This sort of action would give a high probability that the market will trade to the next exponent of phi, that is to say a level 4.236 times the intitial alpha-beta base. That would approximate 0.7335.

Posted by Pure Guesswork at 1:31 PM | Permalink | Comments (0) | TrackBacks (0)