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AUD/USD Wave Relationships Suggest Support Nearby

AUD/USD Wave Relationships Suggest Support Nearby

Jeremy Wagner, CEWA-M, Head of Education


Talking Points

-Commodity currencies have been under pressure for the last few days

-AUD/USD poised to turn higher in wave 4 of 5

-Look for resistance 7860-7940 to anticipate the beginning of green wave 5

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Since the Bank of Canada came out with their surprise rate cut last week, the commodity currencies have been under pressure including AUDUSD.

Two weeks ago, we laid out 3 different wave counts with the favored count showing purple wave 4 resting place in the 8250-8300 range. Prices did reach the range and now appear to be falling in purple wave 5.

As we inspect the Elliott Wave pattern of this ending wave (purple wave 5), we look for five waves to subdivide inside of it. It appears we have just finished green wave 3 as there are three different wave relationships and a price channel suggesting support in the 7740-7795 price zone.

If this wave count is correct, prices may have one more up-down sequence to finish purple wave 5 (see idealized pattern below).

As a result, anticipate green wave 4 to bounce higher near 78-79 cents. If a reversal lower is successful near 79 cents, prices likely are to revisit the recent lows of 77 cents.

There are a couple of other possibilities we are keeping in mind. It is possible that green wave 5 and purple wave 5 are finishing now. A meaningful break above 80 cents will tip the hand to that count.

Also, continued movement lower without an upward retracement suggests that purple wave 5 continues to extend lower perhaps to 74 cents.

Other Recent Elliott Wave Counts:

USDCAD Extends Higher on Surprise Rate Cut (10 minute video)

Gold and a Bullish Elliott Wave Count (5 minute video)

Elliott Wave Analysis for EUR/GBP (6 minute video)

Not sure what an equal wave pattern is? Watch this 10 minute video.

Additional tools to identify levels and sentiment on AUDUSD:

Instant Support and Resistance Levels, a Simple Must_have Tool (article)

The DailyFX Plus Technical Analyzer (free registration required)

Speculative Sentiment Index (free registration required and provides access to the Technical Analyzer too)

-Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his DailyFX Forex Educators Bio Page.

This article uses Fibonacci ratios to follow a variety of patterns including Elliott Wave. To learn more about Fibonacci ratios, register to take this free 20 minute on demand course. Register here.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.