FX.co ★ Elliott Wave analysis of AUD/USD for January 07, 2014

AUD/USD Elliott Wave
For the last few days the AUD/USD pair has been trading downwards, final wave (v) (coloured red) of the bigger wave 1 (coloured blue) has been developing. Yesterday's descending movements from 0.8970 towards 0.8900 do not look impulsive, and that is why we are going with idea of the diagonal pattern in the wave i of (v). When wave i (coloured blue) completes cycle at the 0.8840 level, we are going to look for a pullback towards 0.8935 to join the sellers that are showing interest in this pair at the moment. In accordance with our wave rules and taking into account that wave 5 should retrace 161.8% of wave 4, we can define the potential targets with measuring wave 4 with take profit at 0.8735 (161.8% of wave 4).

Support and Resistance
(S3) 0.8892 (S2) 0.8913 (S1) 0.8940 (PP) 0.8961 (R1) 0.8988 (R2) 0.9009 (R3) 0.9036

Trading forecast
Proceeding from Elliot Wave rules today, the trend is expected to begin the downwards movement. That is why short position at 0.8935 with stop loss at 0.8995 and take profit at 0.8735 are recommended.