FX.co ★ AUD/USD Elliott wave count and Fibonacci levels - January 5, 2011

This currency pair is developing subwave C (colored yellow in the chart) within wave C of medium term downtrend (colored orange red in the chart). The targets below the current price level are Fibonacci retracements of 0.9540-1.0255, 0.9833-1.0255, and expansions off 1.0255-1.0055-1.0105, 1.0105-1.0027-1.0075.

Supports:

- 0.9997-94 = confluence area of objective point (OP) and .618 retracement
- 0.9982-81 = confluence area of .382 retracement and contracted objective point (COP)
- 0.9949 = expanded objective point (XOP)
- 0.9933 = .764 ret
- 0.9905-0.9898 = confluence area of OP and .50 ret

If the price reverses up the nearest resistances will be Fibonacci retracements of the wave down from 1.0255 - this wave is not developed yet.

Overbought/Oversold

Assuming that medium term trend is down, it's preferable to use overbought readings of the Detrended Oscillator or its cross above the zero level to consider short positions. The price is now below the zero level and oversold, therefore now is not a proper moment to consider shorts. New short positions can be considered only on recovery to the zero level which is 20 pips above the current price - 1.0040, or when the indicator shows overbought market - 45-55 pips above the current price - 1.0065-75.

Read more on how to apply Fibonacci studies to calculate price targets.