FX.co ★ AUD/USD Elliott wave count and Fibonacci levels - January 17, 2011

The AUD/USD is developing subwave B (colored red in the chart) within corrective wave B of medium term downtrend - colored magenta in the chart. The targets of the downmove are Fibonacci retracements of 0.9803-1.0019, 0.9540-1.0255, and expansions off 1.0255-0.9803-1.0019, 1.0019-0.9950-0.9986, 0.9986-0.9855-0.9919.

Supports:

- 0.9854 = .764 retracement, the price reversed just within 1 pip
- 0.9838 = contracted objective point (COP)
- 0.9805 = super expanded objective point (SXOP)

If the price breaks below 0.9803 then wave 0.9803-1.0019 will be considered as finished and the targets of the downmove (wave C) will be the following:

- 0.9788 = objective point (OP)
- 0.9740 = COP
- 0.9709-07 = confluence area of .764 retracement and expanded objective point (XOP)

If the price breaks above 0.9919, the nearest resistances will be Fibonacci retracements of 1.0019-0.9855, 1.0255-0.9803.

Resistances:

- 0.9937 = .50 retracement
- 0.9956 = .618 ret
- 1.0029 = .50 ret
- 1.0082 = .618 ret

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 oscillator is now below the zero level and going into the oversold area, which means that the market is a bit overextended to the downside and not suitable for shorts right now. Therefore wait until the oscillator crosses above the zero - which is 15-20 pips away, and only then start considering short positions.

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