In June this year, AUD/USD broke above the long-term downtrend trendline as well as the 200 Exponential Moving Average, suggesting the change in trend. After the breakout price corrected down and rejected the trendline, right at 0.6775 support. The next upside wave followed, taking the pair up to 0.7415, which was the highest point since August 2018.
From September, AUD/USD initiated an ABC downside correction, based on the Elliot Wave Theory. This correction ended when the price has reached and rejected the 61.8% Fibonacci retracement level which is near the 0.7000 psychological level. On October 21, price has formed a double bottom near 0.7000 and this is when the new Fibonacci cycle has started. Although during the past 6 trading days, AUD/USD hasn’t been very active and still is trading near 0.7000 area, thus making it attractive for swing traders and investors.
Therefore, as long as the daily closing price remains above 0.7000, the new upside wave is likely to begin. This could be a very strong rally for AUD/USD, just purely based on the size of the previous wave. But using the Fibonacci retracement indicator, applied to the first corrective wave down after the pair bottomed out, it shows that 1061.8% corresponds to the 361.8% Fibs applied to the currency ABC correction. This is 1400 pips upside potential move, making a buying opportunity extremely attractive because it provides a very good risk to reward ratio.
In regards to the downside risk, it’s possible that AUD/USD will attempt to test the 200 EMA or SMA, although it is very important that the daily closing price will remain above 0.7000. If this support will get broken, AUD/USD is likely to continue trending down, potentially towards the 0.6800 support area.
Key support levels: 0.7000, 0.6800
Key resistance levels: 0.7415, 0.8229, 0.8463, 0.8700
Thanks for your support! If you liked this analysis, please support our profile with a 👍 and follow us to get a new daily analysis .
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
From September, AUD/USD initiated an ABC downside correction, based on the Elliot Wave Theory. This correction ended when the price has reached and rejected the 61.8% Fibonacci retracement level which is near the 0.7000 psychological level. On October 21, price has formed a double bottom near 0.7000 and this is when the new Fibonacci cycle has started. Although during the past 6 trading days, AUD/USD hasn’t been very active and still is trading near 0.7000 area, thus making it attractive for swing traders and investors.
Therefore, as long as the daily closing price remains above 0.7000, the new upside wave is likely to begin. This could be a very strong rally for AUD/USD, just purely based on the size of the previous wave. But using the Fibonacci retracement indicator, applied to the first corrective wave down after the pair bottomed out, it shows that 1061.8% corresponds to the 361.8% Fibs applied to the currency ABC correction. This is 1400 pips upside potential move, making a buying opportunity extremely attractive because it provides a very good risk to reward ratio.
In regards to the downside risk, it’s possible that AUD/USD will attempt to test the 200 EMA or SMA, although it is very important that the daily closing price will remain above 0.7000. If this support will get broken, AUD/USD is likely to continue trending down, potentially towards the 0.6800 support area.
Key support levels: 0.7000, 0.6800
Key resistance levels: 0.7415, 0.8229, 0.8463, 0.8700
Thanks for your support! If you liked this analysis, please support our profile with a 👍 and follow us to get a new daily analysis .
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.