Aussie is rallying to 0.8 as part of a major recovery from a fast dip to 0.775. It seems the rally is corrective and price would resume the bearish move as the 15 February AUDUSD Elliott wave analysis below shows.
Elliott wave theory can be very simple at the beginning. A 5-wave move up or down and a 3-wave correction against the previous direction. To do well using Elliott wave theory, especially for beginners, it’s important to look at price charts that are very simple to read and analyse. Anyone who has picked a good book on Elliott wave, should be able to identify an impulse wave (5 non-overlapping trendy price pattern) and a 3-wave zigzag correction. It seems that’s what is happening at the moment in Aussie.
In our free Telegram channel, we took subscribers through this journey of identifying wave patterns. The chart below shows an impulsive bearish Aussie.
The impulse wave was complete and there was a reversal signal that showed price had a good chance to rally on the 15 min chart. Price did rally as expected after breaking above the 15 min diagonal/wedge pattern. The chart below shows what happened next.
At the end of the impulse wave, a 3-wave bullish corrective move was expected. Price rallied to complete the first leg and then we shared the chart above on the Telegram channel for subscribers to watch the 2nd and 3rd leg of a probable zigzag pattern to 0.79 region. Price did just that as the chart below shows.
The chart above shows price is about to complete a 3-wave corrective rally upside and we have marked 0.798-0.8 as the possible zone where the bears could win over again. This is to shows that by looking at a simple and clear chart, wave patterns can be recognized even by newbie Elliott wave users. Keeping it simple is the key.
Let’s advance further and look at the bigger picture. If we take more historical price data, is our current wave labeling in line? The chart below shows Aussie Elliott wave analysis from a larger time frame.
15 February AUDUSD Elliott wave analysis and forecast
The previous charts showed a 5-wave decline from 0.8135 to 0.7785 and the eventual 3-wave correction that followed toward 0.8 (being the first bearish reversal zone as earlier mentioned). But before this, there was another larger degree clear impulse wave. This shows that the 0.8145-0.7785-0.8 moves are part of a larger degree 3-wave bearish correction. It thus means that price is still favored to go down to 0.76 or below. What we need to do now is to ascertain the end of wave b (circled). When this happens, we usually inform free subscribers on telegram with simple charts before posting here. You can also be one of our free subscribers. JOIN
To conclude, recognizing simple wave patterns and avoiding the complex ones can save you a lot of time and hassles. A chart that is clear with simple wave patterns are by far more usable, tradable and of course, more profitable.
Let me know what you think by your comments below.