This is a
post for traders who use Elliot waves. Please don’t expect that all
post in this blog will be so specific. This one is an exception. Most post will be
more user-friendly ;) Promise... (y)
Have you noticed how corrective every single move is in AUD/USD recently? Every trader familiar whit the Elliot wave theory (personally I work with Glen Neely method) knows that 3 corrective waves in a roll leave us with two assumptions – Triangle or Terminal impulse. So far I can’t tell which pattern is forming. Of course, I hope it will be a terminal impulse (also called Ending). It is the most generous formation in the wave theory in my opinion. I will come back to this topic when the price progress reviews some more clues. Meanwhile let me point out a few interesting signals, which define the last two moves as corrective (99% certainty :)
AUD/USD 2H - 28 September 2012
Signal 1 – The entire rise in price is clearly in 5 waves. It may look like an impulse, but in my opinion it is a double combination (two corrective moves one after another). Killer argument - the second advance is the shortest wave.
Signal 2 – Another illusion. This may sound a little confusing, but actually this pattern don’t violate the rules for a triangle (according to Glen Neely method). When wave B is longer than wave A, wave C may be longer then wave B (Nobody said that this theory is a piece of cake). Some other theories may name this patter "Diametric". To be honest I am not familiar with the rules of diametric formation. However, we have a triangle/diametric in second wave. This can’t be a start of an impulse.
Signal 3 – If at the start of October we see a new rise in AUD/USD (So far I am expecting to see one), this also mustn’t be an impulse. The correction is more that 61.80% Fibonacci.
