AUDUSD ended the correction in Intermediate wave (X) after reaching 0.7486 and then started rallying from there. With today’s new high the pair is showing 5 waves impulsive move from 03/09/2017 low and has already reached the minimum target area for Minutte wave (v) to end. The minimum target for Minutte wave (v) can be calculated as the inverse 1.236-1.618 Fibonacci extension of Minutte wave (iv) which comes at 0.7734 – .07753. Short term, an extension higher can’t be ruled out as there are still 2 other methods for calculating the 5th wave and one method of calculating (v) = (i) gives us a higher target around the equal legs area at 0.7765 – 0.7790. However, we need to be aware that cycle from 3/9 low (0.7486) is mature and pair can complete Minute wave ((a)) any moment and then start Minute wave ((b)) pullback in 3 , 7 or 11 swing to correct cycle from 3/9 low. After ending at least 3 waves pullback in Minute wave ((b)), we expect AUDUSD to find buyers for the next leg higher as it has a bullish sequence from December 2016 low due to breaking above 02/23/2017 high (0.7740).
AUDUSD is showing 5 swings sequence from 12/23/2017 low after it managed to break above 02/23 peak so the sequence is bullish against Intermediate wave (X) low (0.7487). The pair did 5 waves impulsive move from 03/09 low in Minute wave ((a)) which ended at 03/23 peak (0.7749) and currently doing Minute wave ((b)) pullback that’s unfolding as a double three structure. We expect Minute wave ((b)) to complete in the blue box equal legs area (0.7571 – 0.7544) where AUDUSD can resume the rally for new highs or bounce in 3 waves at least. If the pair manage to get above (0.7683) high before reaching the inflection area then there is a chance that Minute wave ((b)) ended and the next leg to the upside started already. We don’t like selling the pair and expect buyers to appear in above mentioned area for new highs above wave ((a)) or a 3 wave bounce at least.
AUDUSD found a possible bottom in December 2015 and has bounced higher. The pair has tried to test the December 2015 low but has been rejected twice, once in May 2016 and the second time in December 2016, both at the point D (Blue pattern) BC 0.50%-0.618% Fib. retracement levels. We at Elliottwave-Forecast still feel the pair can continue pushing higher in the coming days and weeks. Only time will tell what the pair will do. Below are scenarios of why we feel the pair remains bullish.
AUDUSD Daily Chart: Bullish pattern (Blue) still needs to push above point C high to complete the pattern. If AUDUSD continues higher we can expect the pair to push towards the green target zone box (0.8070 – 0.8200 area) which is also the Fib. 1.0% – 1.236% extension.
AUDUSD 1 Hour Chart: On the 1 hour chart we can see another bullish pattern (Blue) that triggers a BUY at the BC 0.50% Fib. retracement level where point D of the bullish pattern can terminate. Expect bulls to be waiting at the green box (Buy Zone) to push the pair higher. The buy zone is also at a support/resistance level where price can bounce off .
If looking to buy AUDUSD traders should be patient and wait for the 1 hour blue point D pullback to the BC 0.50% Fib. level buy zone (green box). Waiting for the blue point D pullback/retrace to the possible buy zone area will offer a better risk/reward trade setup. Stop loss should be placed at the blue point B 0.7490 low.
Of course, like any strategy/technique, there will be times when the strategy/technique fails so proper money/risk management should always be used on every trade.
*** Always use proper risk/money management according to your account size ***