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Elliott Wave: S&P Gains Means More Upside For AUD/USD

Uptrend on Aud/Usd shown from 0.8065 May lows is unfinished since the pair formed only a three wave A)-B)-C) decline from the most recent 1.0181 highs. As such, we believe that this retrace was only a temporary pull-back, probably a corrective blue wave (4) which is part of an impulse structure. On our daily chart you will also notice that pair found the base in this past week just above 38.2% retracement area of a wave (3) distance and around the base channel support zone at the same time, which is a strong evidence that wave (4) lows are in place around 0.9530.

With this being said, the outlook for Aud/Usd remains very bullish with wave (5) yet to come, a leg that should reach levels above 1.0181 November highs.

aud to usd elliot wave december Guest post by  Gregor Horvat

In fact, when the global markets are moving higher traders usually grab the opportunity on high yielding currencies, such as Australian dollar. They buy high yielding currency usually against the U.S. dollar because the greenback has a negative correlation with the global market move, as investors take money from “safe havens” and put it into the risky assets.

Well, if we take a look on the S&P500 daily chart then we can see that “risk is on” and will likely continue till the end of this year. The price structure shows a contracting triangle in wave (4) followed by a wave (5) which will break above 1227 high soon.  Once highs are out, market will have room for gains all the way towards the 1280 area, which also means more upside for Aud/Usd.

S&P Elliot Wave December

The last chart that we will show you today is an overlay chart between S&P500 and Aud/Usd which confirms a positive and very strong correlation between these two markets and that a recent reversal was just another correction within uptrend.

AUD USD S&P Overlay

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Gregor Horvat

Gregor Horvat

Grega Horvat Grega is based in Slovenia and has been involved in markets since 2003. He is the owner of Ew-Forecast, but before that he was working for Capital Forex Group and TheLFB.com. His feature articles have been published on FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. He recently won the award on FXStreet.com for Best Forex Analysis in 2016. At Ew-forecast he helps clients and educates them about the Elliott wave principle and how to label and track unfolding patterns in real time. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets such as candlestick patterns, MA, technical indicators etc. His specialty, however, is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other tools/indicators. EW-Forecast To be involved in the market effectively, you need the right guidance and resources, and our team can help you to achieve that. Our team is providing advanced informations about Elliott Wave theory in real time. The Elliott Wave Principle gives you a method for identifying the behavior of the markets and at what points the market is most likely to turn. We help new traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our views as simple as possible with educational goal, because knowledge itself is power!