Daily chart shows the rally starting around July 2010. the AUD/JPY is currently bouncing on the top of the 61.8% retracement from the may flash crash. The pair will need to continue up as a failure to stay above the 61.8% retracement could result in the beginning of a correction for the current rally. Also the pair is trading between the 20 and 50 day moving averages which should provide decent support / resistance. Watch for breaks above / below these moving averages. 200 MA is around the 80 level which could be retested if a correction occurs.
On the 5th of January, an impulsive move occurred. to correction failed to retrace to the 50% level, and current price action is trading just above the 61.8% retracement level. Looking at the bollinger bands it appears that the pair is trading above it, indicating that a pull back from the current price is likely.
Other technicals are mixed, but it appears on a daily chart that 1-2 more days of upside and the pair will be in an over sold condition. Where the MACD is currently selling pressure is likely to accelerate.
Check out this interactive chart @ www.freestockcharts.com
This wave count I am going to keep updating until it is proven true or false. Which means, I am expecting a impulse to the upside to be completing with wave 5 terminating between 1265 - 1300. the 1285 area is the ideal target where wave 1 = wave 5 in length. January 5th was the date that would have been equal to the time duration of the last wave 1.
This count's implication is that the correction should be relatively deep, and the first leg down should start around now and terminate around mid-end of February.
Note that the current price action is trading at the bollinger band. Therefore a pull back is more likely to occur than continuing buy pressure at this stage.
Hourly Chart of the S&P500.
The current pattern appears to be forming an ending triangle. Watch for accelerated selling if the 1250 level is broken.
Using hourly technicals MACD (top) and Slow Stoch (bottom) it appears momentum is down, and slight bearish divergences are occurring. This can be seen with the recent lower highs on the indicators above compared with the higher highs in the price action.
A deep correct could force the S&P 500 to test 200 MA daily (1150), 200 MA hourly (1240) at the minimum.
I will repeat that January option expiration week might be telling. Many aspects of the market and economy are making a lot of investors question the current situation, and how sustainable it is without allowing for natural corrections.
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