CME Opening Commentary

The Australian Dollar rebounded overnight, erasing earlier losses and putting the market in a position to post a daily closing price reversal bottom. The rally seems to be technically related as it occurred following a test of a major Fibonacci retracement level at .9812. The Australian Dollar rebounded overnight, erasing earlier losses and putting the market in a position to post a daily closing price reversal bottom. The rally seems to be technically related as it occurred following a test of a major Fibonacci retracement level at .9812. Based on the current main swing of 1.0256 to .9803, traders should look for the start of a possible retracement to 1.0029 – 1.0083. First, however, the Aussie has to break through a downtrending resistance angle at .9936. A move through this level is likely to trigger stops and an acceleration to the upside.The market is rallying despite bleak news from the Queensland area of Australia where massive flooding continues to wreak havoc on peoples’ lives. The situation has grown so bad that economists have slashed their 2011 gross domestic product forecast for Australia from 3.3% to 3.0%. Short-covering is helping the Euro recover in Asian trading ahead of a closely monitored government debt auction in Portugal. Wednesday’s auction is expected to be a big test for the Euro as the Portuguese government continues to insist that it can handle its fiscal problems without the help of the European Central Bank or the International Monetary Fund. Technically, a new short-term range has been formed between 1.3434 – 1.2873. Upside momentum over the next few days could drive this market into a retracement zone at 1.3153 to 1.3220 before selling pressure is expected to resume. For further information on this and other Pattern, Price & Time products visit our website at www.patternpricetime.com