Where next for AUDUSD?

[Mercury]

What a difference a day makes!  When you think about it the move up yesterday was too strong to end there so both the Daily Tramline pair and the tentative Triangle have been proved wrong it seems and this market continues up, most likely now to a new higher high Wave 4 as per the alternative scenario I had been tracking.  Unless something truly unexpected happens like a massive rally I think we are down to one scenario only now unless there is a last minute reversal back down.  The higher high could come in the form of a double top of course.

 

I have redrawn my chart based on the new price information and have a large parallel tramline pair (blue).  The top line of which, plus the previously drawn green line, intersects with the down sloping tramline from the Weekly chart at various points in September and hanging above this is the Weekly chart Fib 50%.

 

The EWT A-B (Pink) are still valid so it just remains to be seen if the market falls short of the April 2016 high, makes a double top (rare) or pushes on to a new high Wave 4 (Purple).  Given other FX set ups I suspect we will see the latter with the USD strength returning toward the middle of the month with Sept 22 FOMC as the key determining factor for all USD FX pairs.  For me it is most likely that once a turn is put in this market will drop away as USD goes on a significant rally.

 



 

 

[donaldprice]

I think the AUD $ has been this years currency EWT mind twister lol. This is why anybody in this business knows that this is a constant ever learning process. Anyway from a perspective we could now be finally now resume the main overall trend to the downside and start W5 as of late Thursday the 8th. However I am not sure if this is dollar influence or the Australian economy just taking a hammering or their is expected more QE or interest rate cuts. Regardless of what the driving fundamental factors are, I don't think at this point in time it would be unfair to suggest the analysis charted below. By all means, suggest a different perspective.



[Mercury]

I have exactly that scenario too  and agree this market has been challenging during this retrace with multiple scenarios and signals coming and going.  Accordingly I could not yet call this scenario and would need to see a break through my lower tramline and also the support zone (and Fib 50% from previous high-low).

 

The alternative scenario of a higher high wave 4 remains a valid one (see alternative EWT count in red).  Therefore we have the classic case of a pivotal point at or around my lower tramline with both a bounce back rally and a breakout down being possible.  Looking a the hourly chart I have an interesting set up with a confluence of the Daily tramline (remember it doesn't map right on PRT) a set of hourly parallel tramlines and the Fib 88% off the 31 Aug low.  The strength of the move down is hard to trade against but often such moves produce equal or stronger counter moves and thee move down can be described as an A-B with a 1-4 so far of C.

 

Therefore my bias (although not strong) is for a rally at the critical point so I will gear up for that an only consider a short on a break of the lower fib 50% level (7490).

 



[donaldprice]

Hi Mercury. As stated before, having this alternative W count can always help plan for a trade of a given alternative scenario. I think i would be correct, in you suggesting that this would be a double zig zag, which would therefore correspond with your alternative W count.

Because of the nature of this current complex market, and i mean seriously irritating market, i think we must also consider that if the EUR, GBP and Yen have their own bulls and bears to complete it would not be irrational to suggest that the aud $ would also have more to gain. Therefore if we fail to pass the end of W1 then the alternative W count is most likely in play.



[Mercury]

Don't know much about double zigzags and all that  but I am wondering if we may get a double bottom at this strong support zone.  A turn here would bring a new Wave 4 high into play but a break would favour the downside scenario/  I find it hard to see the downside scenario if USD is set for some weakness.  Havign said that I expect EURUSD to show weakness before it rallies so let's see...

 



[Mercury]

Looks suspiciously like a higher wave 4 now.  Slightly amended tramline pair to account for the turning point today.

 

Long until near the Fib 50% (7930) in my view.

 

 

 

[donaldprice]

Hi Mercury, most likely have noticed this morning, AUD $ has not broken through the double bottom. Therefore the alternative wave count could come very much alive momentarily as it has turned an 88% fib from the previous possible W1. Therefore this could offer a good risk to reward ratio.



[Mercury]

Yes I'm in Long on that and the previous turn with tight stops, as you say high risk reward ratio, my favourite!  A close above the over night highs would confirm this set up as the most likely with a target in the area of 7900.

[Mercury]

One reason I was confident of taking a Long here, as well as the primary analysis of course, is that GBPAUD looked like going into a retrace and with GBPUSD set for another rally after the current retrace move this added up to a strong rally on AUDUSD.  Even if you don't want to trade it there is benefit in looking at the whole Triad.

 

See GBPAUD charts for reference below: