Tuesday, 5 June 2012

AUD/USD looks to have begun another leg lower

Hourly candlestick chart is shown below. That recurring trend line angle has struck again (first shown last week), acting as resistance, with the test of trend line resistance being followed by a decline and downwards break through the trend line drawn from the early June low.

Why is this trend line angle showing up repeatedly? Simply, it's the nature of the AUD/USD right now. Like I said in the previous post, others can dance about architecture if that's what they like, and make up stories to explain it. Even more inexplicable, they could attempt to apply fundamental analysis to markets, which are clearly and purely fractal in nature. Me, I'll just use the angle til it stops working, and then I'll find another pattern.

EUR/USD and German DAX trend lines cap the global rally

Why do markets often trade within trend channels? I think asking that question is a bit like asking why do trees have branches and leaves? Simply, it is their nature. Full stop. You can make up stories to explain that nature if you like, but that makes as much sense to me as dancing about architecture.

This evening the EUR/USD has fallen and so too has the DAX in sympathy with other European indexes, leading stock futures lower for the US and Asia.

While the DAX remains below the nearby overhead trend channel, the trend is clearly down, and could accelerate. That line has been tested again both today and yesterday, so risk is small for the immediate bearish case.

The EUR/USD has been trending down in a tight channel since the beginning of May, and turned lower just beyond the upper line earlier today .