As of Friday’s closing price of $91.85, the Rydex CurrencyShares Australian Dollar Trust ETF (FXA) has rallied 52 per cent from its low hit in October 2008, and had retraced 95 per cent of the large down trend started at the July 2008 peak and is now at the 93 per cent retracement level. The climb from the bottoms has been steady since March 2009.
FXA continues to show strength having signaled a continuation of the trend out of its recent retracement with a break through $91.48 and the retracement trend line on Friday.
A move through the next minor resistance of $92.04 indicates this break should hold and continue to strengthen through the recent high of $93.41, and on to the next resistance level of $95, the high in October 2007.
After that it’s in the area of multiple resistance areas where it will likely see some profit taking or some form of consolidation before moving higher, if it’s going to. It would be difficult for the momentum of the uptrend to continue through those high resistance levels without significant rest of some sort.
The breakout on Friday occurred on a gap, so it’s possible to see a bit of a throwback providing a good entry level, or a move through Friday’s high of $92.04 could be used. Volume on Friday was at the 50ADV level.
FXA ETF Chart – Trend Continuation
iShares Dow Jones US Energy Sector Index Fund ETF (IYE) closed at $33.45 on Friday, right at the resistance trend line of its recent retracement. IYE is now 50.6 per cent off the lows in March.
IYE is beyond the 31.8% Fibonacci retracement level ($31.90) of the larger down trend started at the high of May 2008, which is very close to where support was found on this current retracement ($32.18). That support was also at the uptrend line and in a zone of previous horizontal resistance.
Resistance has now become support after the recent rally before the retracement saw IYE clearing its bottoming consolidation area.
A move through $33.73, Friday’s high, also confirms a move through the down trend line and indicates a likely continuation move up to at least the recent high ($35.48), 5.2 per cent higher. The next target after that is the 50 per cent Fibonacci retracement level, which is at $37.45 (11 per cent higher).
IYE ETF Chart – Trend Continuation
