Observation on the AUDNZD up to 11-06-2008

Australia and New Zealand are two economies that are connected to the Asian Boom. They are also two economies with some orientation to natural resources and high interest rates.

Let's see what their relationship is as it is reflected in their currencies. The following weekly chart is showing a possible opportunity here:

1. From the end of 2005, the pair is in a very large consolidation in the shape of a symmetric triangle. The last move up, from December 2007 up to now has succeeded to break up from this triangle pattern. This was done near the 1.20-1.19 price area.
   
   
2. This last move has taken the form of a 5 wave impulsive move, so that the next expected price action should be at least an ABC downward combination.
   
   
3. If our Elliott count is correct, the pair is finishing wave 5 by arriving near the 123.6% Fibonacci projection. The next Fibonacci projection is at 1.28 where we can find the 138.2%.
   
   
4. RSI, STOC and even the MACD are largely overbought.
   
   
5. The usual immediate target for a correction is normally: The end of the previous wave 4, a breakout point or a Fibonacci retracement level. We can find all these in one area: 1.20-1.19.

Conclusion:

The pair is overbought and has reached the 123.6% Fibonacci projection. The last move was a distinctive 5 wave impulsive. Some corrective phase should come soon with the 1.20-1.19 as obvious target. A move over the current price area should bring the pair to the next logic target: 1.28 and by doing so, delay the awaited drop.

Disclaimer

By no means do any part of this article recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this article. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this article was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.
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About the Author

Moshe Shalom Head of Technical Analysis Department ForexManage Ltd Site: www.forexmanage.com Email: This email address is being protected from spam bots, you need Javascript enabled to view it