[B]Commentary[/B]: We wrote yesterday that “a drop under .8786 would indicate additional bearish potential as that would throw a potential ending diagonal formation out the window. This may be the beginning of a large wave 4 decline that declines to at least .8707.” The AUSUSD has dropped off of a cliff and traded close to .8550 this morning.
We are treating the decline as the beginning of larger wave 4 in the 5 wave rally from .7268. Over the next seversal weeks, the AUDUSD could decline to the former 4th wave at .8162. However, since we are viewing this as a larger correction, then trading is likely to prove choppy over the next several weeks (but chop lower). [B]Strategy[/B]: Flat