Six months ago, in early-December, 2022, we wrote a comprehensive analysis of AUDUSD. It included our Elliott Wave interpretation of the pair’s historical, weekly and daily price charts. Gladly, six months later now, this analysis is still valid.
Earlier today, the RBA raised its cash rate to 4.1%, its highest level in 11 years. The hike grabbed traders’ attention, who then pushed AUDUSD sharply higher. The Reserve Bank of Australia also stated that further rate increases may be needed to bring inflation down. This bodes well for the Aussie bulls and also supports the mid-term positive outlook we shared with readers in late-2022. Today, we’ll see that the pair’s short-term prospects now look bullish, as well.
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The 4-hour chart of AUDUSD reveals that the recovery from 0.6170 to 0.7158 can be marked as a five-wave impulse. The pattern is labeled 1-2-3-4-5, where the five sub-waves of wave 3 are also visible. This impulse in wave (1) was followed by a simple a-b-c zigzag in wave (2) down to the 61.8% Fibonacci support.
If this count is correct, wave (3) to the upside has just begun. This means that AUDUSD ‘s weekly, daily and hourly charts have now aligned and are all pointing north. Initial bullish targets above 0.7160 are within reach, but given the bigger picture, 0.8500 makes sense, too. Traders, willing to join the bulls here can use 0.6458 as a stop-loss level.
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