FX.co ★ AUD/USD Elliott wave count and Fibonacci levels - February 15, 2011

The AUD/USD is developing potential wave 5 (colored red in the chart) of the medium term downtrend. To confirm this wave break below 0.9960 is needed , since this is the top of wave 3. The targets below the current price level are Fibonacci expansions off 1.0199-1.0103-1.0189 (waves 1-2), 1.0188-0.9960-1.0073.

Supports:

- 0.9938-32 = confluence area of super expanded objective point (SXOP) and contracted objective point (COP)
- 0.9845 = objective point (OP)

If the price keeps advancing the immediate resistances will be Fibonacci retracements of 1.0188-0.9960 (wave 3), 1.0139-0.9960 (subwave C within wave 3), and expansions off 0.9960-1.0073-1.0002.

Resistances:

- 1.0071-72-74 = confluence area of .618 retracement, COP and .50 retracement
- 1.0101 = .618 ret
- 1.0115 = OP
- 1.0185 = expanded objective point (XOP)

Overbought/Oversold

Assuming that the medium term trend is still down according to wave count (until 1.0073 is exceeded), 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 moving into the oversold. Therefore we need a retracement, e.g. above the zero level (10-15 pips) or into the overbought (25-35 pips) which roughly corresponds to resistance area at 1.0171-74.

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