We have already shown you “how to recognize an unreliable support” by using the Elliott Wave Principle. The thing is that this support, once broken, often becomes resistance in the future. Just as expected in “AUDJPY Has A Major Trendline To Break”, the pair recently went through one such major support. Here is how the forecast looked like on January 24th.
As visible, we had a 5-3 wave cycle on the daily chart of AUDJPY, so we anticipated the continuation of the downtrend. Those of you, who have been observing this pair, know that the exchange rate blew right through the line. However, the bears soon lost their inertia, allowing the bulls to test the trendline from the other side. This is where we are now.
Starting from the top of wave C, we can count a five-wave impulsive decline, followed by a three-wave recovery. According to the theory, AUDJPY should resume its journey to the south. This is the reason we believe the line, which once served as a support, is going to become resistance. If this analysis is correct, we should prepare for much lower levels in AUDJPY from now on.
