Elliott Wave Analysis: Minor Corrective Wave 2 Within Downtrend On AUDUSD
AUDUSD has turned down from 0.7834 high in May after wave C-circled completed a big corrective wave IV flat pattern. A flat has a 3-3-5 sub-wave structure, so it was a contra-trend movement that should send price back to the lows. So far, market made a very good and strong bearish turn to 0.7130 with clearly impulsive personality, thus we believe that big black wave V is underway. That been said, we are looking lower as long as 0.7834 holds, so bounce is most-likely only a corrective wave two that can stop near 0.7500 resistance.
On the lower time frame, we see that AUDUSD made five waves down from 0.7836 which is the most important and strong evidence of a bearish trend. However, we always need to be aware of corrective reversals, which are short-lived patterns against that five wave structure. That said, recent upward reversal is probably a new contra-trend pattern that will ideally look for a top at 0.7450-0.7500 resistance area from where new sell-of will be expected in days ahead. So far we have seen a nice turn down in the last 24 hours from 0.7500 which suggests that more weakness can be in play, but we still want to see 0.7310 broken for the final bearish confirmation.
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