AUDUSD Elliott wave Setup: bullish continuation?

In this article, we will discuss what could happen next as the Aussie made a surprise rally yesterday. About two weeks prior to yesterday’s rally, this currency pair was in a bearish mood. The long term trend remains upside and the following will show if there is a strong case for bullish continuation possibilities.

The chart below shows the strong rally that started early May at around 0.7320.

AUDUSD Elliott wave analysis

AUDUSD Elliott wave analysis, H6 (click to zoom)

It’s clear that an impulse wave is surfacing above. Price has probably completed the 4th sub-wave of the 3rd wave. This shows that there is a likelihood that price will still rally unless it breaks below 0.7795 support. If price is supported by 0,7795 and breaks above  0.807, the last 2 weeks bears will soon be defeated by a renewed bullish pressure. We favor a bullish bias as of now. The chart below shows the wave analysis of sub-wave 4 of (3) and yesterday’s rally.

AUDUSD Elliott wave analysis

AUDUSD Elliott wave analysis, H2 (click to zoom)

The drop was measured by a precise double zigzag pattern. Price responded positively to this and now making a correction. There could be a really good opportunity to buy at the 50% retracement of the correction or slightly deeper. The following is how we can take advantage of a resumed bullish move.

Trade Idea: Buying zone at 0.7860-0.7880.

Stop loss (Invalid level) at 0.7800.

Target 1 – 0.7967.

Target 2- 0.8049.

Target 3: 0.8131.

Final Target – 0.83.

We will follow up this trade idea and provide recommendations on how to manage it. Stay tuned.

Please drop your comments/questions below.

 

 

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