AUD/USD rally from 12/23/2016 low (0.716) is unfolding in what looks like an impulse. An impulse is a 5 waves move where wave 1, 3 and 5 is subdivided into 5 waves. There is also a momentum divergence in wave ((v)) of 3, as well as a divergence in wave 5 of 3. Below is the 4 hour chart of AUD/USD
The pair is currently in wave 5 which has a subdivision of an ending diagonal. An ending diagonal is a special type of 5 waves move which appears as subdivision of wave 5 in an impulse. Ending diagonal is characterized by overlapping wave 1 and 4 and also by the wedge shape. The subdivision of an ending diagonal is 3-3-3-3. Below is the 1 hour chart of AUD/USD to see the subdivision of the ending diagonal more clearly
The cycle from 12/23/2016 low is therefore mature and could end any moment. It’s risky to chase the strength in AUD/USD at this stage and once the pair ends the diagonal, expect the pair to do a strong pullback in 3, 7, or 11 swing to correct the cycle from 12/23/2016 low and could see 200 – 300 points correction back to around 0.73 – 0.74
Elliott Wave Cycle
