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Near Term AUDUSD and EURUSD Expectations

Near Term AUDUSD and EURUSD Expectations

Jamie Saettele, CMT, Sr. Technical Strategist

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Suspicions that the AUDUSD rally from the 6/25 (9968) low was unfolding as a diagonal are being proved correct with price nearing last week’s high. Watch the i-iii line, which intersects the 100% extension of wave iii at 10520 on Monday. Theoretically, the AUDUSD shouldn’t exceed 10520 (if this indeed a diagonal) as doing so would make wave iii the shortest wave from 9968 and violate the rules of Elliott. Remember also that the advance from June 1 is probably wave D of a triangle. The implications being that the next big move is lower in wave E below parity.

The anticipated reversal has materialized in the EURUSD and we can now focus on how far the rally is likely to extend. Elliott wave guidelines state that wave 4 often alternates with wave 2 of the same degree with respect to character. In other words, if wave 2 is sharp and simple then expect wave 4 to be shallow and complex. Wave 2 (13003-13384) was sharp (retracing 78.6% of wave 1) and simple (3 wave zigzag) thus we should expect wave 4 to be shallow and complex. Shallow means a 23.6%-38.2% retracement of wave 3. The corresponding levels are 12378 and 12570. Daily RSI will help us time the end of wave 4 as well but we’ll deal with that when appropriate.

AUDUSD – 240 Minute Bars

Near_Term_AUDUSD_and_EURUSD_Expectations_body_audusd.png, Near Term AUDUSD and EURUSD Expectations

Prepared by Jamie Saettele, CMT

AUDUSD – Weekly Bars

Near_Term_AUDUSD_and_EURUSD_Expectations_body_audusd_1.png, Near Term AUDUSD and EURUSD Expectations

Prepared by Jamie Saettele, CMT

EURUSD – Daily Bars

Near_Term_AUDUSD_and_EURUSD_Expectations_body_eurusd.png, Near Term AUDUSD and EURUSD Expectations

Prepared by Jamie Saettele, CMT

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Jamie is the author of Sentiment in the Forex Market.

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

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