The first problem in AUD/USD is correlations to AUD/JPY, AUD/NZD and AUD/CHF run minus 73&, Minus 81% and minus 93%. This means a long or short in AUD/USD will see opposite movements in AUD/JPY, AUD/NZD and AUD/CHF. In short, AUD/USD moves opposite AUD/JPY, AUD/NZD and AUD/CHF. Two weeks ago, AUD/CAD also had minus 90% correlations to AUD/USD. What changes correlations in all currency pairs is all must break significant points to allow AUD/USD a remarriage of its main trading pairs.
AUD/NZD from the close at 1.0651 sits on a big line break at 1.0614. This line deserves special attention throughout the week as the break below would see a significant downside move. First targets below 1.0569 and 1.0555. Then 1.0510 and 1.0450. Don’t look for 1.0450 anytime soon as AUD/USD would have to break 0.7808.
On the upside 1.0757 is a huge break point but again AUD/USD would need to break its big points at now 0.7477 and 0.7768. Overall the downtrend in AUD/NZD begins at 1.0513 and uptrend at 1.0713. Current 1.0614 is dead center of the uptrend and downtrend points. Current price sits on a solid base at 1.0205.
Upside points 1.0714, 1.0701. Watch 1.0675, 1.0681 and 1.0683 as big breaks to travel higher.
AUD/JPY. From Friday close at 79.47, big break points are located at 79.63 and 80.34. AUD/JPY just broke 79.63 so next downside targets are 78.85 and 78.75 then 78.44 and 77.97. Again don’t marry the 77.97 target anytime soon as AUD/JPY sits on a big solid base at 76.14. Further, 76.14 means AUD/USD breaks an important line at 0.7808. AUD/USD 0.7808 means much higher on a break.
Break above at 80.34 only achieves 80.94.
Upside points are many. 79.69, 79.71, 79.84, 79.93 thn 80.34 and 80.94.
Brian Twomey, Inside the Currency Market, btwomey.com