Trend followers are short; stop 94.07; take some profit now
Investors are short; stop 94.12
Outlook:
AUS Dec06 bill prices respected immediate channel resistance around 93.89 and the subsequent drop made a higher low at 93.76 just as the short-term cycle rolled over.The firm rise on Friday is a good sign that prices will continue higher.
Immediate channel resistance, now at 93.87, is likely to contain the rise again this week.The subsequent drop should hold above last week’s low.
In the following week prices should break above 93.87 to confirm the next stage higher is underway.It will not be a decisive move as mvg avg resistance at 93.95 limits the advance for a short while.Eventually prices should test the next channel resistance at 94.05 probably by the time the short-term cycle rolls over again at the end of July.
This rally will probably be just a corrective swing in the broader trend development from January’s 94.53 high.A high at the end of July will position bill prices for a resumption of the decline.When the low at 93.75 eventually gives way, prices should continue towards 93.15.
However, there is a chance that the corrective sequence will take a longer period.The rise to 94.00 may prove to be just the first leg of a broader pattern.Prices could return to 93.75 before rising back to 94.050 again.Such a corrective phase will take till September to complete.
I remain mindful that the break of the upward trendline in April has created the opportunity for a downward acceleration of the decline at any time.
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