AUD/USD - Headed for important support

It has been a while (http://theelliottwavesufer.blogspot.com/2011/10/audusd-is-big-decline-in-cards.html) since I have looked at the AUD/USD pair. My view is the same as then. Since early 2001 we have seen a major double Zig-Zag correction to 110.80 in 2011. Looking at the internal relationship between the two Zig-Zag's they are exactly equal in length.
We might of cause be looking at a triple Zig-Zag, but if this is the case we still a much deeper "X" wave to develop first.
The first natural target is support at 93.86 and a break here will confirm a decline towards the bottom of wave B2 at 80.73. But I think a more likely target will be the rising red support line, which currently is at 64.89.

AUD/USD - Double top in place?

We might just have seen a minor double top. A formation that will be confirm upon a break below the 100.98 - 101.14 area. A break below 100.98 will trigger the double top for a decline towards strong support near 98.61, which is also where we find the mid-line of the Pitchfork.
As long as support at 100.98 isn't broken a new move higher towards 103.50 can't be excluded, but it's not my preferred scenario.

AUD/USD - Short term top in place

Sunday I wrote, that AUD/USD was facing strong resistance at 103.80 (See the post here:
http://theelliottwavesufer.blogspot.com/2011/10/audusd-facing-strong-overhead.html)

Yesterday we saw a top just 9 small pips below, with the test of 103.71 and everything points towards a top, whats needed is a break below 100.98, which should turn us down towards 98.60. If suppot at 98.60 is broken too we could easily see a move down towards the 93.86 low again.

But for a break below 100.98 is needed.

AUD/USD - At strong resistance

AUD/USD is back testing the Shoulder/Head/Shoulder top neckline near 100. The preferred count is that we are looking at a expended flat correction as red wave ii and soon should see red wave iii to the downside.

Beside the neckline we find the 38.2% retracement target of red wave i at 100.50. So expect strong resistance in the 100 - 100.50 area.

AUD/USD - At strong resistance

The long term count does show, that we have seen a double Zig-zag from the low at 47.73 in 2001 to the 2011 high at 110.80. The break below 99.65 triggered a Shoulder/Head/Shoulder top, which has a target at 87.93, but longer term we should see AUD/USD much lower.
The question is whether we are looking at an "X" wave in a triple Zig-zag or a new low below 47.73.


Zooming in on the last part of the rally to 110.80 we can see, that we are back-testing the S/H/S neck-line (prior it was support now it has become resistance) and should soon see a break below 96.11, which will confirm my long term bearish count.
That said I have one concern. The decline from 110.80 to 96.11 is clearly in three wave and wave "a" and wave "c" is equal in length, but it will take a break above 103.98 to confirm this count and a new rally higher towards 110.80. This count is not my preferred count, but we will have to consider the possibility.

A Mixed bag of goodies

S&P 500 - It has been a while since I have said anything about this index, but now seems to be a good time.
We are testing important support here at 1,108 (neckline support of a major Shoulder/Head/Shoulder top), if this support breaks we are looking at a 813 target.
Looking at the MACD-Indicator it's turning down below the zero-line, which is quiet negative for the outlook and raises the odds for a break below support.

AUD/USD - We saw important support at 99.72 be broken, the break at thesame time triggered a big Shoulder/Head/Shoulder top with a 87.93 target.
Short term we can see support at the red falling Pitchfork, if however this support breaks we will see acceleration to the downside.
The neckline will now act as resistance.

Apple - The top is in place! The break back into the ending diagonal is a clear sign of weakness and we should soon the diagonal support-line tested and a break here will confirm a decline to all important support at 353.

AUD/USD - At important support

Is currently testing important support at 99.72, a break below here will trigger a large Shoulde/Head/Shoulder top for a decline to at least the 87 - 88 area.

From an Elliott Wave perspective I see the rally from the 2001 low at 47.73 as a double zig-zag correction (see the chart below). A break below 99.72 will confirm 110.80 as a long term important top calling for a decline towards at least the 79 - 81 area, but we will likely see it even lower.

AUD/USD & NZD/USD - Ready to test strong support

The faith of AUD should soon be decided. A break below strong support at 97.16 will confirm that we saw an important top at 110.80 and the end of wave C of the second zig-zag. A break below 97.16 could spark a sever downturn towards the 81 - 83 area where the next serious support is found. Longer term I looking for a decline towards the 64 area.

Short term I would expect resistance at 103.52 to protect the upside for a break below 103 and more importantly 101.08, which confirms the test of strong support at 97.16.


NZD has had a tremendous rally since March 2009, but the latest price action does show, that the previous trend has ended and a return to the Pitchfork mid-line near 68 is under way, but we could even see a move to the lower Pitchfork line near 52. First serious support is at 77.50, but is should just be a question of time before it's broken.

Short term resistance is found in the 84 - 85 area and should protect the upside for a break below 79.59 confirming the test of 77.50.

AUD/USD - Closeing in on the top...

We saw a minor throw-over ending the Ending Diagonal yesterday, but failure to break clearly below 104.18 and the following new top, changes the micro count. The minor Ending Diagonal was "just" the end of red wave iii and we are now in red wave v. The double divergence at the MACD indicator has now evolved into a possible triple divergence. The possible target for the last rally is at 105.68. There is a possibility for a moonshot towards the 106.47 target, but I will not set my expectations to high for that target to be reached. I will use that as guide to where my stop-loss on shorts should be placed.

AUD/USD - Topping?

I haven't written about AUD since the end of January. Link to that post below: http://theelliottwavesufer.blogspot.com/2011/01/audusd-time-for-next-part-of-decline.html In that post I said, that a break above 102.53 would target the 105-106 area, which is where we are now. Therefore it's time to take a new look at the Aussie. First lets take a look at the monthly chart. The rally from the bottom at 47.73 in April 2001 to the top at 94.01 in November 2007 was a nice five wave rally. This rally was followed by an Expanded flat correction down to 60.04 in October 2008. Since then we have seen a new five wave rally up to 105.03 which means, that we now is in my target-zone. Therefore the obvious question will be, are we to find the top soon? Zooming in on the daily chart and the final rally since 60.04 we can see a clear five wave rally. We have double divergence at the MACD indicator and finaly we are looking at to resistance-lines just above. All pointing towards a top soon, but are we at the top?

Zooming in further on the hourly chart and the last part of the rally since 97.04, we again can see a five wave rally into the target-zoon. The final rally seem to be an Ending Diagonal. I would like to see a throw-over the Ending Diagonal resistance-line followed by a break below 104.18, which will be the first minor confimation that the top is in place for a decline to at least 98.00 and probably 97.04. A clear break below 97.04 will extend the losses towards the top of the 87 area.

Looking at the entire rally from 47.73 the best fit is, that an Zig-Zag has formed. The ideal target for wave C is 106.47, where wave C will be equal to wave A in length. That said we have to be open to a much more bullish case. The rally from 60.04 could be just wave i of a much bigger wave 3 higher. If this is the case I would expect the near term correction to be rather small followed by a very powerfull wave iii of 3 rally through the top of wave i. This is not the preferred count at this point, but we have to stay flexible.

AUD/USD - Time for the next part of the decline?

All odds still favor the 102.53 high as the top of wave 5, however we should soon see some acceleration to the downside if this is the case. A break below 98.00 should propel us down to 95.30 and most likely a lot lower.

The risk is that the top at 102.53 only was a minor top and we need one more high before the entire rally since 60.73 finally find it's peak. A break above 102.53 could lift us up to the 105-106 area.

AUD/USD - Important top in place?

The above count is my preferred at this point. As it can be seen it points to a full five wave rally since the low in late 2008. That means the upside at the very least is limited at this point, if not an important top is in place, as per my prefereed count. The evidence pointing towards an important top being in place is negative divergence at the weekly stoch. indicator and ofcause the complet five wave rally.

To confirm the top we need a break below support at 95.42 (the bottom of wave iv of 5), but a clear break below the minor support-line will be further indication, that an important top is in place.

Finally looking at the hourly chart. we can see a five wave decline from 102.53, which at the very least indicats , that we shall see a Zig-zag correction lower. I do expect that this was only the first leg lower in a much deeper decline to the bottom of wave 4 at 80.90, which is also the 50% retracemnet target for the rally from 60.73 to 102.53.

The next leg lower should be seen, when the hourly stoch. indicator rolls over to the downside.

AUD/USD - We should see one more new high

It's some time since I last showed this chart, but we should be very close to the top. From a time point of view we could spend a little more time (the red part of the rectangle) tracing out the last rally towards a new high just above the 100.06 high.

Looking at the 4-hourly chart (see below) we are currently making a flat correction and are in the last part of the C-leg down, from where the last rally above 100.06 should begin. When this last rally is done close to par, we should see a big decline.

AUD/USD - We are in last part of the rally

Jem has asked me for my view on AUD/USD. This cross has been a very tough call. Wave 4 broke the nice wave 2-4 channel (the gray channel) after what could look like a fifth failure an fell in five waves, but it turned out to be wave c of 4. Despite the following break above 94.05 the end of wave 3, I still view the rally from 60.04 as wave [B] in a major flat or expanded flat correction. If the current rally is part of a flat correction (my preferred count), then we should be very close to the top. We might need a little longer time-wise before the top is finally set, but not necessary a much higher high. The two boxes I have drawn represent my best estimates of a time extreme.

If I'm right that the current rally since the 60.04 low is just part (wave [B]) of an major flat correction, then we should soon see wave [C] down take over. Wave [C] should ideally end below the end of wave [A], which means that the low of wave [C] would be below 60.04 in late 2011 (ideally around December 13 - 2011).

If this tunes out to be a expanded flat correction we could see this [B] rally extend to the 107 area and in its extreme the 113 area. If this is the case at no time should we see a break below 92.08, before the top near 107 or 113 is in place.

In the short term a break below 95.40 and more importantly 94,60 would weaken the bullish case and add caution for a possible top.

By the way, the last part of the rally from 87.69 seem to be exponentially in shape, which should add caution in stability of this rally too.

AUD/USD - Time for wave 3 down?

My preferred count is shown above. It seems as wave has become an expanded flat and if my count is correct wave 2 ended at 91.82 and we should be in the early stages of wave 3 down. Pretty much the same count as in EUR/USD, but the AUD/USD cross has pressured the maximal limites every time. It does make live more exciting doesn't it...

A break above 92.21 will kill my preferred count and call for a rally to new highs above 94.05.

AUD/USD - Wave 3 of [C] down has just begun

First lets take a look at the longer term picture. Since the July 20 - 2008 top at 98.49 we have seen a three legged Zig-zag move down to 60.04 ending wave [A]. From 60.04 we have seen a flat correction up to 93.89. Wave 5 of C of [B] became truncated. We are now in the very early stages of wave [C] down. As wave [B] corrected 95.33% of wave [A] and this wave was a three wave decline and wave [B] was a three wave rally we are looking at a flat correction. That means that wave [C] should be a five wave decline slightly exceeding the ending point of wave [A] giving us a final target for wave [C] just below 60.04.

If we zoom in on the time frame and look at the daily chart we can see wave two became a double correction - first a flat and then a zig-zag correction in combination. Wave 2 corrected almost all of wave 1 and took back 98.28%. That is allowed for wave two's and is most commonly seen in the currency market.

If we take a look at the some Fibonacci relationships of wave 2 Wave c of the flat correction became 1.618 times longer than wave a and took 21 days. Looking at the zig-zag part wave a = c in length and if we count from the top of wave c it took 55 days.

Zooming in once more and looking at the hourly time frame we should be just about to see the first minute five wave decline end near the 88.54 - 88.86 area. Minute wave iii became 1.618 times longer than minute wave i, which mean that minute wave v most likely will be equal in length to minute wave i, they will be equal at 88.86. ending minor wave 1.

Minor wave 2 will most likely end in the 90.35 - 90.84 area. Be aware that we are now entering wave 3 of [C] down and this wave is expected to be the steepest, the longest and the most violent, so the correction could easily become subnormal.

The USD has bottomed!

The odds favor, that the dollar has bottomed. In the EUR/USD cross the minor support line has been broken. This cross broke slightly above the 38.2% retracement target, but the latest price action is bearish for EUR and bullish for USD. A break below 131.17 would be the next good indication, that the top is in place for the EUR/USD cross.

Looking at the AUD/USD cross my ideal target zone was hit (slightly exceeded) and the break below the ending diagonal support line does indicate that the top is in place and that we should soon see much lower prices. A break below 90.68 will confirm the top for a decline to at least 83.18 area.

AUD/USD - Next target is within reach

I still convinced that we are looking at a double correction, where the first correction was a flat and the second is a zig-zag. As we are closing in at the next target area near 91.85-92.00.
Wave C2 will be equal in length at 91.85 and the resistance line will come in near 92.00. There is a possibility of a extension higher to 92.30 - 92.40, but that should be it and at least set the stages of a decline to 89.02. My preferred picture is that a important top is close by and we should see a much deeper decline in wave 3 of [C] down.

AUD/USD - Time for the next impulsive leg down?

Saw a top on the exact day, when wave 2 had taken 1.618 times (47 days) the amount of days wave 1 took (29 days). That add confidence in my count that wave 2 is over.

Zooming in on the latest price action, we can see on the hourly chart below, that the decline from 90.64 to 89.13 was wave i (five wave decline - see the 5 minutes chart below the hourly chart)and the rally to 90.42 was wave ii (A expanded flat - wave b broke below the start of wave a and wace c rally well above the startingpoint of wave b). Wave ii corrected 78.6% of wave i. We should now be in the early stages of wave iii down.

The current level 90.15 reprecents a very attractive risk/reward trade selling AUD with a stop at 90.75.

AUD/USD - Time to top out...?

From a time point of view we should be very close to the top. Wave 1 down took 29 days and wave 2 up has taken 47 days today, that makes wave 2 1.618 times the amount of days that wave 1 took. At the same time the wave 2 rally is looking quite stretched.

Looking at the hourly chart below. we can see that wave C2 is now 0.786 time the length of wave A2, which isn't that common a relationship, but a more common relationship is that at 91.09 the second zig-zag would equal the first zig-zag in length, so we should be close to a top.