AUD/USD: Correction within downtrend

December 2, 2015 09:48 AM

AUD/USD stays bearish as rally from 0.6900 was made in three waves, but based on latest price action we suspect that wave 4) will be much more complex than at first sight. We are looking at a triangle now that is placed within a downtrend of a blue wave (5) that will extend to around 0.6700 by the end of the year. After that we will look for a bullish reversal that could take place in 2016.

AUD/USD, Daily

On the lower time frame, AUD/USD is trading higher for the last few days, within wave C which is now already 0.7300 level. But despite very strong recovery we are still observing idea of a triangle in wave 4) because of corrective personality up from 0.7000. If we are correct, then current gains should be limited near 61.8% Fibonacci for wave A, where is expected to turn lower for wave D.

AUD/USD, Four Hour

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. Triangles are overlapping five wave affairs that subdivide into 3-3-3-3-3.

Basic Triangle Pattern

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and He also is founder of forex services on provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: