Published On: Thu, Feb 23rd, 2017

AUDUSD awaiting a major break to the upside

InstaForex

Background

Markets were hoping for a bit more guidance from the Federal Open Market Committee minutes than a non-committal “fairly soon” appraisal of when the next rate hike should occur. But that is consistent with comments this week from various committee members, who dangled a March 15 hike in front of traders without locking themselves in.

In truth, they are hoping upcoming data, such as the March 1 PCE inflation update and the March 11 employment report, will make the call easier.

So it was no surprise then to see the US dollar treading water.

Management and risk description

From both an Elliott Wave and classical Charting perspectives, AUDUSD has considerable upside potential ahead (see daily and weekly charts below).

A sustained break above the 0.7750 resistance level will complete both a 10-week Rectangle as well as a two-year inverse head & shoulders reversal, with upside targets of 0.8375 and 0.8750 respectively.
Furthermore, Elliott Wave (3) will equal Fibonacci 1.6196 X Wave (1) at .8770 (see daily chart below).

Parameters

Entry: This week: AUDUSD is seen as a Buy on a break above 0.7750 resistance.

Stop: just under 0.7700 initially.
Target: 50% at 0.7978 and 50% at 0.8346.

Time horizon: allow several weeks at least, for both targets to be met.


AUDUSD daily chart (click to expand)

Source: ThomsonReuters 

AUDUSD weekly chart (click to expand)

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more.
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— Edited by Robert Ryan

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