AUD/USD Could Be Topping

Keep an eye on this Head and Shoulders reversal pattern forming on the AUD/USD. If the neckline at 0.821 breaks price will likely head back down to the 0.8050 support level. 80.50 has been solid resistance twice over the last few weeks, and if it breaks it is likely we will see continuation of the move to the downside. It is possible that an impulsive wave 1 is complete from the high and we are now retracing in a wave 2. A move 0.839 will invalidate this count.

AUD/USD Daily

My AUD/USD count is similar to my AUD/JPY count in the fact that I think we are about to drop in a wave 5 of 1 down. As long as the USD remains weak against the Yen however, it is a better idea to trade the AUD/JPY than this pair. As you can seen resistance at 94 was too strong for the Aussie to break through and price has fallen off sharply in what looks to be an impulsive third wave. If equities  remain weak expect the AUD/USD to as well.

AUD/USD Hourly Chart

The AUD/USD is setting up to form a nice Head and Shoulders pattern on the hourly. I will be looking to get short from 0.93 with a stop at 0.9390. Once the neckline is broken the target will be 0.9060, however my longer term ED count for the AUD/USD would have 0.90 as a likely target.

AUD/USD Daily Chart

Here is a ending diagonal count for the AUD/USD pair. If this count is correct it would explain the three wave move from the red 4 at 0.8578. Price has recently broken above the downward sloping trend line which has been very important on several occasions in the past. This is a bullish sign, however I am not certain price action can stay above the line for long. The move from the red 4 definitely doesn't look impulsive so price action using EW can be hard to define. There is always the possibility we are still consolidating and price will remain withing the 0.86-0.94 range which has held it for the most part for over 7 months. At this point in time with all the uncertainty associated with this pair I would not recommend taking any positions in it.

AUD/USD Update

 

Here is an update of my AUD/USD chart from today. The pair has bounced from near the 61.8% level of the A of Z move. The beginning of the third wave has probably begun and we should see a sharp fall from these levels very soon. Look to get short with stop above the recent high.

AUD/USD Hourly Chart Update

 

I have revised my corrective count for the AUD/USD pair. I now think price is forming a triple 3 and is about to complete its final C leg up to the 0.9130 level. As you can see price has just completed a B leg triangle. I have drawn in the Fibonacci levels to show where A of Z will equal C of Z. This is where I expect Z to complete. I will be looking to short from around 0.9125 with a stop above the high at 0.9330. From my larger count you can see that this is a 2nd wave so it is likely there is a lot of downside to come. If my count is correct I will be holding this position for the several month at a minimum, as the AUD falls to below 0.80.

AUD/USD

 

Here is a 4 Hour Chart of the AUD/USD pair. Wave 1 down was complete at 0.8580 and wave 2 looks like it will retrace back to around the 61.8% Fibonacci level, which is common for second waves. I actually expect the AUD/USD to pull back to slightly beyond the 61.8% level at 0.9045, closer to the 0.91 level. A of wave 2 will will be equal to C of wave 2 at around 0.9130, and if my count so far for wave C is correct, wave 1 of C will equal wave 5 of C at around 0.9105. 

I think the confluence zone will be the place to short, and I will be putting my order in at 0.91, with a stop at the high at 0.9330. Although this stop may seem large, there is the possibility that wave 2 will retrace even further to the 78.6% Fib at 0.9170, as second waves often retrace back to within the wave area of first waves one degree down, and the AUD has been very strong over the past week on the back of positive data, so it is best to play it safe. Good luck!

AUD/USD Hourly Update

Here is an update of my AUD/USD chart from earlier in the week. As you can see support at 0.918 has been broken and further downside is expected in a wave 5 to around the 50% Fib at 0.90. A breach of 0.9175 will take wave 4 into the territory of wave 1 and invalidate this count. A low risk scalp would be to set a short at 0.915 with a stop 30 pips away at 0.918. Target 0.903 and move stops to break even to negate and possible loss when feasible.

AUD/USD Hourly Chart

Here is what I think is happening in the AUD/USD. As you can see there is a clear 5 waves up. I am expecting a break of the support line within the next session, with a fair amount of follow through the bring the pair down to around the 0.90 area. It is possible that a wave ii flat is forming, which means it will take longer before the support line gives way. A move above 0.933 invalidates this count.

AUD/USD 15 Minute Chart

Here is my interpretation of the corrective price action we have been seeing lately in the AUD/USD pair. I think a flat is almost complete and we will be seeing some USD strength over the coming session. As you can see wave 5 of c of B is almost reaching the point where it will be equal to wave 1 of c of B.

AUD Looking strong. Could the US Dollar Bear still be in Control?

The AUD/USD has rallied sharply over the last fortnight in what looks to be an impulse wave. 5 waves up looks almost complete and coincides with the pair moving into an area or previous resistance. 0.9320 should not break too easily but if it does fold, 0.94 will be the next hurdle. I don't think it is very likely that this impulse wave will extend even though wave 3 < 1.618 x wave 1. Wave 5 = wave 3 at 0.9380. Look for a turn around there if 0.9320 gives way. I am not trading this pair at the moment but may consider getting long after a wave 2 pullback.

AUD/USD H&S Failure

Price has reverted further above the neckline of the head and shoulders pattern making a drop to 0.85 in the coming days unlikely. Above is a bearish chart with a possible 1-2-1-2 count, however with every passing day I increasingly question whether my call for a USD bottom may be premature. The strength of the rally against the US dollar over the past few days means it is probable that there will be one more high to come for the AUD against the Greenback. For the above chart to remain possible price must not exceed 93.23. Below is a bullish AUD/USD chart which is beginning to seem like the more probable outcome. Although the rally may extend further north, a pullback to the 61.8% Fib will be likely sometime soon, as a wave 2 of 5, so be cautious if placing longs at current levels.

AUD/USD 4 Hour Chart

The AUD/USD pair has rallied above the 0.9015 level, thus invalidating the chart possibility I posted on December 28th. Here is the alternate count I proposed, where the currency pair may be forming an extremely bearish 1-2-1-2 formation. I have drawn in the Fibonacci levels above in blue. As you can see price action has almost reached the 61.8% level, which is right on 0.91. I expect some resistance at this level. The head and shoulders pattern we have been watching develop over the previous months is still valid, however with every push higher the likelihood of the pattern playing out as we have been hoping diminishes.

AUD/USD Trend Line Retest

The Aussie has rebounded against the Greenback far more than I had anticipated. My previous count may be incorrect and 5 waves down may already be complete at 0.8735. Either way expect the neckline of the Head and Shoulders pattern to provide formidable resistance and offer an excellent shorting opportunity. I will be adding to my short positions from here. Keep stops at 0.92.

AUD/USD Trade Idea

The AUD/USD looks like it is currently forming a 4th wave which should complete at around the 0.8920 area which is both near the 4th wave extreme of the last 5 waves down and the 38.2% Fibonacci retracement of that same drop. We can see that wave 1 retraced to just beneath the 61.8% Fib, so wave 4 will likely retrace slightly beyond its 38.2% retracement. I will be looking to short from 0.8910 with a stop at .9015.

AUD/USD Head & Shoulder Chart

The AUD/USD is touching on the H&S neckline that I have been speaking about for the last month or so. It is likely there will be a small correction before price breaks through support. Once price has dropped through the neckline wait for a retest of the neckline to get short, with a stop about the recent high at 0.9180.

AUD/USD Hourly Chart Update

I really don't think the AUD is ready to break through the H&S neckline just yet. Here is an update of my previous chart. I am still bullish short term. If price reaches 0.8990 it is highly likely to bounce back, even if it is only stalling the break through the neckline. Long orders should be placed here.

AUD/USD Hourly Chart

The last black B wave down looks very much like a 3 wave move (and not impulsive at all), which has me doubting that that AUD is ready to break through the H&S neckline just yet. I expect a bit of strength over the coming sessions.

Another AUD/USD Possibility

As an Elliottician it always important to consider multiple possible patterns. As much as I want the USD to continue its bull run, there is something in the back of my mind warning me to be cautious and not get too focused on any single possibility. It was actually the EUR/USD which has brought me to consider this, as I have a strong belief that 1.4625, the beginning point of the ending diagonal, will be hit prior to a major retracement (as is typical of EDs). It may happen that the AUD/USD consolidates in a 4th wave as the EUR/USD drops to the aforementioned level. The Australian dollar has been strong today on the back of positive employment data, and I expect this to continue over the next session. However if the EUR/USD rallies from 1.4625 then I expect the AUD to gain against the greenback also, which does not fit in with my previous count. This has me perplexed. Be cautious with your shorts, and place your stops accordingly.

AUD/USD Trade Idea

Following on from yesterdays chart, here is an hourly view of the AUD/USD pair. This looks like it could be a very rewarding short in the very near future. Below is a 15 minute zoom of the A-B-C correction above. I have labeled it as an A-B-C in the above chart for simplicities sake, however in the 15 minute chart I go into more detail. There are two possible counts below labeling wave C above. One is in black and one is in green. If the black count is correct, it is possible that it is complete. This will be confirmed if price breaches 0.91 without making a newer high. Look to short at 0.922 with a stop above 0.9325, or on a break of 0.91 if 0.92 is not hit.

I am exiting both my GBP/USD and AUD/USD long positions now. The AUD/USD because I have a count that says the pair may have topped already, and the GBP/USD, which has performed very poorly, because it is coming up to resistance and looks weak.