By: Erik Swarts | Fri, Aug 3, 2012
Print Email

Anyone who has been following my work over the past three months knows, I have been keeping a close eye on the Aussie as it works its way across the SPX topping pattern from last year. It has been a moving target to appraise, but did point out in May where the lows would be made in June and now appears to be pointing to another inflection point here in August. For a quick explanation of the methodology used in this comparison, see Here.

Using the 2011 SPX model's proportion of a 98.9% retracement of the intraday high would generate an equivalent target in FXA of 105.90. Considering FXA reached an intraday high of 105.73 today, puts us in very close proximity of finding the next pivot - which would be lower. The same could be said of the SPX.

2011SPX versus 2012 Australian Dollar

2011 SPX daily

2012 Australian Dollar Daily

2011/12 Australian Dollar and SPX

2011/12 SPX Daily

Fractals in motion.

2011 SPX and 2011/12 FXA

Considering that the respective markets are positioned so close to where the pattern would be considered broken (>100% retracement), presents an excellent opportunity to position yourself on the short side of this market. 98.9% is a very strong move - but it's not 100%.



Erik Swarts

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

Copyright © 2011-2016 Erik Swarts

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com