Recently we have seen a strong and impulsive break above the previous resistance of the channel and now it can become our new support. Currently, we see that the market is ranging, and soon bear forces will come to an end. We are clearly in a pullback, which can represent the second Elliott wave, which ideally should test previous resistance, now support level. The pair can retrace in the area anywhere between 61,8 to 38,2% Fibo retracements, as it is shown on the chart. It’s not about being right; it’s about trading in the direction of the market moves and here we do expect resume of an uptrend above the previous high after this pullback is finished.
Our current suggestion is to buy on a pullback.
Current price action suggests that we are tracking retrace on Dollar index after 5 waves leg one. We do expect a break above the previous high or the previous wave a, above 95,73. This pullback ideally should finish in the Fibonacci resistance area. Something similar you can see also on a Gold chart. In a longer term we do expect Dollar strengthening, and at the same time, EUR/USD weakening. In the meantime, traders, observe don’t absorb.
From the Elliott wave theory aspect it is inevitable that we are going to see the breaking of the previous third wave lower low at 0,6850, but of course, any price action is not the only one-way price action, and any moves down is followed by the retrace up. At this point on AUD/USD is better to stay patient, and stay out until we do not see some decent pullback higher, where we could short it for the target of at least a few hundred pips.