Above is my preferred count on this market, notice how the decline seen recently is of greatest momentum since the impulse started in December last year, which is an early signal that the move is of larger degree rather than part of or the wave 4 correction as per my alternate count presented bellow. The horizontal lines are targets for the third wave (1.618x wave (i) & 2.618x wave (i) respectively). What occurred on the oscillator is very interesting, I once heard analyst Jeffery Kennedy state that he noticed that in a rising market (also applies to falling markets) when divergence occurs between price and the oscillator and prices don't follow through as one would expect by selling off substantially, sometimes a rise to a higher peak on the oscillator occurs to form what looks like a 'V' as illustrated above, only then prices follow through and behave as one would have anticipated from the initial divergence.
Now lets take a look at the AUD/USD currency pair as it has proven to be one of the most sensitive currency pairs to risk, as evident by the overlay chart presented bellow
I have 2 primary counts on the AUD/USD, Presented bellow is the count that fits into the picture of the general USD bias. However I will also discuss what this count doesnt have going for it.
The sole thing thats making me doubt this interpretation is how strongly we've rallied and broke the baseline (0-2) of this count. Usually the baseline caps all of the wave 3 price action which is not the case in this count, another point to note is the deep percentage retracement of the second wave of smaller degree, although typical after leading diagonals, a guideline of extentions states that the smaller second waves usually tend to make smaller percentage retracements than the second waves of larger degree. The April 3rd high (second day of the trading month) has not been broken as of now due to the idea presented several times on this blog with regards to financial markets remembering thier 'firsts'. Not only do they usually make thier highs/lows in the first few days of the month but the range of the bar (April 3rd in this case) acts as resistance/support (resistance in this case) notice that we made it into that range and sold off significantly. The bounce is a zigzag as of now a break bellow the diagonal low would confirm this count.
IMPORTANT NOTE: If preferred count is to prove accurate prices need to COLLAPSE soon not only do we have a series of 1-2s we also have a leading diagonal which usually signals an extended & volatile third wave to come.
The count above is my alternate, based on my horizontal analysis in terms of risky assets and other USD currency pairs it still remains the lower probability outcome. A break bellow the 0.9767 would invalidate a diagonal count.
Regards,
Ahmed Farghaly
No comments:
Post a Comment