FX.co ★ AUD/USD analysis for October 22, 2013

AUD/USD Elliott Wave
Last week, the AUDUSD pair was trading upwards, just like we expected, corrective wave a (coloured blue) of the bigger wave (y) was developing. Yesterday, during the Asian and European sessions we could observe sideways movements between 0.9677 and 0.9641. Therefore, during the New York session this major pair did not manage to hold around the highs and the price dropped to 0.9650. At the moment, the AUDUSD pair is trading around 0.9656, and we are expecting to see one more push lower, before we see the end of the b wave (coloured blue). In accordance with our wave rules and taking into account that wave b should retrace 50% of wave a, we can define the potential targets with measuring wave a with take profit at 0.9598 (50% of wave a). To reduce the risk, we can use a resistance point at 0.9677 as stop loss.

Support and Resistance
(S3) 0.9602, (S2) 0.9622, (S1) 0.9638, (PP) 0.9658, (R1) 0.9674, (R2) 0.9694, (R3) 0.9710.

Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin the downward movements. That is why short positions at the level of 0.9650 with stop loss at 0.9677 and take profit at 0.9598 are recommended.