May 31, 2023: AUDUSD Elliott Wave and Technical Analysis – Charts and Video
For the short term, the recent downwards trend is expected to continue, but not below 0.61705. Thereafter, a strong bullish third wave may unfold.
Technicals support the current 2 year corrective structure. A break above resistance at 0.7150 could signal a strong bull market.
The quarterly chart shows most of the price history of the AUDUSD.
With supercycle wave (b) being a clear zigzag corrective structure, and supercycle wave (c) also being a 7 wave structure that did not make new lows, a contracting triangle is shown for our main AUDUSD count.
With supercycle wave (c) likely complete, supercycle wave (d) may be underway upwards and must subdivide as a zigzag.
This correlates well with the overall negative relationship with the U.S. Dollar index that only shows negative 20-90% correlation (see monthly technical chart). While this is not reliable for monthly, weekly, and daily candlesticks, it gives us a general negative correlation that fits with the current DXY and EURUSD forecasts.
Within a regular contracting triangle, waves c, d and e often retrace the same percentage as the preceding wave. With supercycle wave (c) retracing 88% of supercycle wave (b), this gives us a target for supercycle wave (d) of 1.04438.
The monthly chart focuses on supercycle wave (c) and the start of suspercycle wave (d).
With supercycle wave (c) possibly complete as a double zigzag, supercycle wave (d) must subdivide as a zigzag. Only one triangle sub-wave may subdivide as a multiple.
Within supercycle wave (d): Cycle waves a and b may be complete with cycle wave c having primary wave 1 complete and primary wave 2 expected to pull back further. The target of 1.04438 may seem far off, but that level also corresponds well with the 1.618 fibonacci extension of cycle wave a at 1.02106 (not pictured on chart), which shows a target is realistic above 1.00000.
An Elliott channel is drawn around cycle waves a and b. The bottom edge of the channel may act as support for primary wave 2.
The weekly chart focuses on cycle wave b and the start of cycle wave c within Super Cycle wave (d).
Cycle wave b is a countertrend corrective movement best labeled here as a WXY double zigzag. From its bottom a clean impulse can be see from October 2022 to late January 2023, which is labeled as primary wave 1 of cycle wave c.
Within cycle wave c, primary wave 2 appears to be unfolding as a sharp zigzag correction with intermediate waves (A) and (B) complete and (C) likely to continue down.
Intermediate wave (C) may find support along the lower edge of the black Elliott Channel, which may bring it close to the invalidation point. A longer-term Elliott channel is in blue, which could also act as support for primary wave 2. The depth of this correction is common for wave 2 positions in a new impulse.
An invalidation for this medium-term wave count is at 0.61705 where primary wave 2 may not move beyond the start of primary wave 1.
The daily chart focuses primary wave 2.
On this daily chart we can see a very clean A-B-C zigzag unfolding so far inside primary wave 2. Intermediate wave (A) subdivides as an impulse, intermediate wave (B) as an expanded flat, and intermediate wave (C) may be underway as a very clean impulse.
Within intermediate wave (C): Minor waves 1 and 2 may be complete and within minor wave 3 minute waves i through iv may be complete. Price is expected to continue falling until minor waves 3, 4, and 5 are complete.
A target is calculated for intermediate wave (C) to reach equality with intermediate wave (A) at 0.62252, corresponding well with the edge of the black Elliott channel.
On the monthly chart, price is falling of its own weight.
There is a very significant range on the On Balance Volume, with the upper orange line more significant than the lower purple. A breach of the upper orange line would support the Elliott wave count and indicate a possible price rise to over 1.0000.
On the monthly chart, moving averages are fully bearish.
With ADX indicating no trend, price may continue downwards until Stochastics reaches oversold and support is reached maybe at 0.6200, corresponding well with the Elliott wave count.
While a general negative correlation can be seen between the AUDUSD and USD, it is not reliable enough to show correlated movements at monthly/weekly/daily chart levels.
Volume is decreasing with the new trend since September 2022, common for wave 1 and 2 positions. People are scared to enter the new trend, because the last bear trend is influencing their outlook of the market.
There is double bullish divergence between price and money flow, a bullish sign that this down trend could be ending soon.
On Balance Volume shows a significant range starting December 2022, and a confident break upwards out of the channel would support the Elliott wave count.
The weekly chart shows the 200 day moving average sloping down and price trading below.
With ADX showing no clear trend, Stochastics oversold, and support far away at 0.6200, price could slowly fall until support is reached at 0.6200.
If ADX rises above 15, then this would be the early stages of a bear trend, which may continue downwards until RSI reaches oversold, ADX reaches extreme, or support is reached at 0.6200
ATR suggests volatility could be limited downwards.
Correlation between the AUDUSD and DXY is unreliable at the weekly level.
Volume is flat to decreasing with the new bear trend.
Bullish divergence between price and money flow supports the Elliott wave count.
There is also a significant range for On Balance Volume at this time frame. On Balance Volume across all time frames indicates there could be a breakout soon.
A death cross happened in mid-April when the 50 day moving average crossed below the 200 day moving average, a bearish signal that has been followed through.
ADX shows a bear trend, not yet extreme with much longer to go. With RSI still neutral, this indicates the bear trend could continue. However, volatility could be limited with ATR rapidly falling.
These technicals support the Elliott wave count, expecting the short term bear market to continue but most likely not below the 0.6200 area.
Published @ 04:48 p.m. ET.
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