AUDUSD rallied like other major currency pairs after the rate hike decision last week. Does the rally mean the end of the bearish correction?. The following forecast what is expected of the AUSSIE in the coming days and weeks based on 20 March AUDUSD daily Elliott wave analysis.
20March, AtoZForex – In the last update, we identified a complete impulse wave with a diagonal mouth and called for a bearish move to 0.7580 and below. This pattern also completed at a strong resistance. Price fell sharply typical of a diagonal breakout. The breakout of ending diagonal pattern is usually very volatile as you might have observed following our Elliott wave updates. They usually occur prior to a big event. The chart used is repeated below.
The chart shows price breaking briefly out of the ending diagonal. Ending diagonal breakouts are well known to be of high momentum. The breakout was good and there was a pullback to the 50% retracement of the move. Price is presently between 0.7710 and 0.7659, a break above or below respectively will indicate where the nearest direction will be. We favor a break below 0.7659 for price to reach 0.758 and below. A break above 0.7710 will lead price toward 0.7745 and if strong, to 0.7775
Price indeed moved downside to reach 0.758 and below. The move was so fast and volatile as the chart below shows.
The dip got to 0.749 – far below the immediate target at 0.758. This further shows us the importance of the Elliott wave theory as a trading methodology and system. The ultimate target was at 0.74 but price rallied strongly thereby leaving a shallow correction. A break above 0.774 top will establish the long term bullish correction as shown below
20 March AUDUSD daily Elliott wave analysis: what next?
Price is vulnerable to more rallies in the coming weeks. With wave (i)-(iii) seemingly completed at 0.774, a dip to 0.766 can be seen in the coming days before the rally continues to 0.78. It is at this point that we confirm that price is heading to the long term wave (Y) of (IV) to complete what could be a zigzag or flat pattern.
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