We previously wrote about two potential patterns on AUD/USD and how this market may be a late bloomer to the USD correction. Both patterns suggested a trend higher could be on the horizon. Now that price action has played out for a couple weeks, we did get the bounce higher and it appears as though the ‘x’ wave triangle was the pattern. We have yet to break out to new highs so the pattern still has options.
Under the ‘x’ wave triangle model, the pattern is bullish towards new highs above 78 cents. Therefore, bulls are in charge so long as we are above .7329.
For those intraday traders, we can pinpoint the pattern a little further. A shorter term key level to watch for is the June 13 low of .7524. Holding above this low keeps new highs towards .7640 vulnerable. A break below this level puts bulls on ice while support may form above .7329.
IG Client Sentiment is running at -1.56. Over the past couple weeks this reading has turned negative which is a bullish symptom. Therefore, we have sentiment lining up with the model hinting at further gains for the pair. Learn how to trade with sentiment with our IG client sentiment guide.
Three DailyFX analysts selected the Australian Dollar as their top trade for 2017. Read pages 13, 18, 20 of DailyFX’s Top Trades of 2017.
—Written by Jeremy Wagner, CEWA-M
Discuss this market with Jeremy in Monday’s US Opening Bell webinar.
Follow on twitter @JWagnerFXTrader .
Join Jeremy’s distribution list.
EUR/USD has stalled. Where might we be in the Elliott Wave cycle? Read more on my EURUSD analyst pick.
Read the recent Dow Jones Elliott Wave article.
USD/JPY advances in impulses and corrects in three’s…see what that hints at for price action.