Since August 2011 the Australian dollar has been in a bear market. The big counter rallies can fool us into thinking the Australian bear market is over. The 2011 AUD peak and our CAD both ended as solar cycle 24 was finishing.
This is not something coincidental, as the sun cycles impact all currencies. In the last year or so we had a sideways rally that many figured was the start of a new bull market. I was raked over the coals about remaining bearish to the AUD and CAD.
Reality is starting to set in where this 4th wave rally is close to being completely retraced at the 68 cent price level, which is not too far away.
A wild erroneous spike still shows up but other settings do not confirm this spike, so I ignore them. No doubt about it, the AUD decline is not your picture perfect 5 wave impulse as they are rare in anything commodities related.
At 60 cents the Australian dollar would be getting close to the 2008 crash bottom which ended solar cycle 23. The only difference between then and now is that the solar cycle number increased by one.
Australian dollar commercial positions are stacked to a net long position which is a bullish indicator but they can remain that way for extended periods of time.
I believe that the start of solar cycle 25 is going to be positive for both of our currencies but that knowledge means little if we have never experienced the mood change that solar cycles bring.
The Australian dollar is not in the US dollar index, but it reacts much like our CAD does. Commercials have shifted to the long side while the speculators are in a bear trap. Maintaining a bearish wave outlook will not work. The choppy ride up in the last several years looks just like a bearish rally, but they also can belong to a diagonal bullish move. The AUD may have already turned the corner so it needs watching to see if it confirms bullish wave action. I will not produce intraday Minute degree wave counts anymore, as all I need is to confirm 3 degree levels, and Minor degree is it.
I believe that we are in another bullish stage that is heading up to a “B” wave in Primary degree and once this peak becomes clear a new commodities crash will happen. 2011 was a 30 year mania peak which all commodities follow. All commodities as a group have a unique idealized blue print that I am mapping in my memory first, when we don’t, how do we know what we are supposed to be looking for?
Sorry folks, but I’m not any fan of modern-day wave analysis, as they do more damage to investors then they know. Big currency moves are happening and Cycle degree wave 4 crash in the AUD is still to come. At least until solar cycle #25 starts we should see deflationary times as part of the 30 year cycle that I use. Supercycle degree wave 3 in gold will not arrive until 2041 which I’m sure the CAD and AUD will confirm.
Any currency that has supported any run in gold and silver sure have not been cooperative at all. It sure supports the bearish stance that I have. We just finished a Golden Cross, but the Death Cross is in the Australian dollars near future. That puts CAD and AUD on the same path and it represents deflation, as the US dollar is in a big bull market that very few people understand. I think the AUD will play out a huge zigzag correction where part one may just finish this fall.
Either way, new record lows in the Australian dollar will happen, as the last two year rally was a fake just like gold.
The Australian dollar is not in the US dollar basket but it is important to watch as it follows the commodity cycles. During the years I worked on it off and on as the wild gyrations were far above my pay grade. Once we line up the 2001 bottom with the peak of the US dollar and the bottom in gold, The AUD bullish cycle was a zigzag with one mother expanded “B” flat ending with a vertical drop that shocked may gold stock investors. “C” waves of flats end like this as with zigzags this is reversed most of the time.
For gold to crank up dramatically the Australian dollar has to crank up as well. This is not what I see about to happen as the present rally sure fits great into another Elliott Wave triangle. A triangle in a 4th wave bear market rally is fooling many into thinking the bull market in gold is imminent.
At this time the AUD is already heading down and it should not take that long before it trashes the previous wave 3 low in Intermediate degree. It may take the rest of the summer and some of fall to play out, but I sure would never want to bet long on a 4th wave bear market rally.
I have a pretty clean 5 wave decline so far, with diagonal leanings but it does look good as an impulse. One Intermediate degree drop is all we need to help confirm the entire decline.
The AUD also peaked in 2011 and has followed gold and gold stocks down together. You can’t get a better correlation to Gold than when you look at the Australian Dollars big trends. So is gold going to suddenly soar while the AUD keeps heading south? I doubt it, as it would be truly amazing if it did.
The COT report does not show the commercials in a net a short position, but they are long by a small amount but not to any extreme just yet. This may happen at the .60 cent price level. A huge double bottom would be setting up, and a bullish H&S would show up as well.
The perfect setup for a major reversal will come folks, when the talking heads are all spewing out bearish fundamentals concerning the Australian Dollar. Welcome to the club as our Canadian dollar will tag along with the AUD during the next decline.
Given the history how fast the AUD can crash, what may be bullish looking right now, by next week it could trash my wave 3 bottom.