Yesterday we posted an article, called “AUDUSD Bulls Aiming Higher”. We thought the pair has the potential to grow, because we recognized something on its 15-minute chart. A five-wave impulse to the upside, followed by a three-wave retracement. See it below.
We saw a nicely-looking 5-3 wave cycle. According to the Elliott Wave Principle, the trend was supposed to resume in the direction of the impulsive sequence. So that is why we would be expecting a rally in AUDUSD, as long as 0.7015 stayed untouched. Less than 24 hours later, this happened:
The three-wave correction extended into a larger W-X-Y double zig-zag. However, it did not even come close to our invalidation level of 0.7015. All it did was touching the 61.8% Fibonacci level twice. The count remained valid, so there was no need to worry. Several hours later, the first target of 0.7160 has been reached. AUDUSD gave us another example of the fact, that the Wave Principle can be helpful even on the smallest time frames. All one needs to do is to be able to recognize a pattern and stay calm as long as the pattern remains valid.
From now on there are two equally probable scenarios. The first one suggests the whole recovery from 0.7015 to 0.7176 is a simple (A)-(B)-(C) zig-zag correction. In this case, the larger trend point down, which means weaker AUDUSD. The second count implies the idea of an uptrend in progress. According to it, AUDUSD should make a small correction in wave 2 of (3), before going north again. It is up to the market to decide. The good thing is we know how its two most probable choices look like.