Dynamic wave analysis of the aud/usd currency pair



aud/usd, 30 min



A correction move is supposed to follow an impulse wave according to Elliott theory. ( An impulse move is supposed to be following by a corrective phase according to Elliott theory) The chart represents a decline subdivided in 5 waves followed by corrective pattern A-B-C. The idea is to recognize the end of that correction and to open a trade in the direction of the recent downtrend.

Dynamic wave geometry analysis requires several trend channels to be constructed. The first channel is to include wave A. Because wave b:A does 61.8% internal retracement of wave a:A then I drew 0-b trendline first and carried a parallel trendline to it over to the wave a:A high. This is the black channel. The theory clearly says a corrective pattern has got only three points of contact to the channel it is included in. I marked these points with black circles. By the way let me define the black colour on the chart as intermediate analytical degree. There are two degrees left to define – major which I’m going to describe as blue colour and minor as yellow colour. Further the correction makes its B wave which itself represents irregular corrective pattern. Then the price action turns and makes new high to confirm wave B bottom. I carried 0-B trendline over to wave A high in order to construct another channel exactly as I made the first one but this time I used blue colour. The pattern included in the second channel has already got three points of contact drawn as blue circles. As soon as the price touches the channel for the fourth time a breakout is most likely to occur.
In order to find wave C terminal in terms of price and time I've made several projections:
1. 161.8%  alternate price projection of wave A gives a typical price target for wave C;
2. 100.0% time cycle ratio of the wave A bottom to the wave B bottom(these are 230 trading bars) is projected from the intervening high for the wave C high;
3. 161.8% alternate time projection of wave A( these are 178 trading bars) from the wave B bottom;