first majestic silver

AUDNZD False Break Low?

July 14, 2014

n previous reports on the AUDNZD, I have stated that the longer term technicals appear bullish. Hence I have been looking for an opportunity to enter into long positions on this recent pullback. There was an aborted attempt around a month ago but there now appears another opportunity arising. Let's take a look at it using the daily chart.

Daily Chart

I have drawn Fibonacci retracement levels of the upleg from the January 2014 low to recent June 2014 high. We can see that price came down a couple of days ago for a virtual direct hit on the 76.4% level which stands at 1.0618. This can be seen in the highlighted green circle

This low was also a marginal break of the May low of 1.0647 and with no follow through to the downside so far this low is shaping up as a false break low. False breaks are my favourite bottoming (and topping) pattern as I like to see the sellers flushed out. Stops would have been building below the May low so now that they have been taken out the coast is clear, so to speak. However, in this case we have a marginal break of not only the May low but the lower uptrend channel as well. A double false break shall we say?

I have also added a Relative Strength Indicator (RSI) and it can be seen that each of the last three lows is accompanied by a less weak RSI reading. So it appears we have a triple bullish divergence and it is generally after the third low with higher RSI reading that we can expect a significant move higher.

So it appears that conditions are ripe for a turn here. If this pans out as suggested then we can look further out in time in the next report.


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© 2014 Copyright  Austin Galt - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

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