From Morgan Stanley technical analyst Sheena Shah, an Elliot Wave look at the AUD/USD.
There are 3 charts, from the long-term chart looking back to 2005. Says Shah:
- When AUDUSD broke out of the bottom end of the longterm channel at 0.84, a further bearish AUD signal was triggered.
- We still target 0.65 for the end of next year but the short-term charts below show that there could be some upside in the coming weeks.
- Our positioning tracker suggests that the market remains short AUD, therefore opening room for a reversal.
Then to the 2 year chart, comments:
- AUDUSD has failed to break below the 0.6896 low from early September.
- We believe that this was a sign that AUDUSD is set to rebound for the time being.
- We believe that AUDUSD has formed a complete a-wave structure, so the b-wave would take AUDUSD back into the trend channel drawn here. Initial moves above the 0.7300 high are required to keep the momentum
And so to the shorter-term:
Says Shah:
- AUDUSD attempted to make a new low but failed to go below 0.6937.
- We believe this was the end of a b' wave, suggesting further upside for AUD, completing the c' above 0.7273 at least.
- A move above here opens the way to our tactical trading target of 0.7500.
- The level is around the middle of the channel shown above.
