The structure of the technical pattern for AUD/USD suggests the move towards higher levels is incomplete and may eventually reach .82 and possible .84.
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The Elliott Wave model we are following suggests the upward correction that began in September 2015 remains incomplete. According to Elliott Wave Theory, we are counting this pattern as a complex upward correction subdivided as w-x-y and built with Expanded Flat-Triangle-Zigzag.
Zooming in on an intraday chart for the zigzag, we are just about halfway through the pattern. Therefore, once wave (b) of the zigzag completes, AUD/USD would resume to higher prices in a five wave motive wave.
Wave (b) of the zigzag pattern is an expanded flat pattern. Traders can keep an eye on .7508-.7568 as a potential turning point for AUD/USD. This price zone contains a couple different wave relationships. Additionally, a trend line passes through near .7600 so we are anticipating that softness in AUD/USD may end up being temporary.
The orange resistance trend line will be noteworthy. AUD/USD has been rubbing along the bottom of this line. If AUD/USD moves up above this orange resistance line, then the break higher will serve as an early warning signal of higher prices.
Soft horizontal resistance sits near .7666 and above .7730 elevates the probabilities the low is in for a retest of .82 and possibly higher levels.
IG Client Sentiment is running at near parity at +1.28. Therefore, sentiment is not extreme at this point. Keep an eye to see if a shift in sentiment ensues and lines up with the Elliott Wave forecast. See how live traders are positioned in AUDUSD here.
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---Written by Jeremy Wagner, CEWA-M
Jeremy is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources.
Learn more about the Elliott Wave patterns by receiving our beginner and advanced Elliott Wave guides.
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Elliott Wave Impulse Patterns
Elliott Wave Zigzag Patterns
Elliott Wave Flat Patterns
Elliott Wave Triangle Patterns
Elliott Wave Diagonal Patterns
Starting Your Elliott Wave Counting
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