By Elliott Wave Analysis Service | AUDUSD is in pullback mode from 0.9800 where we suspect that pair established a temporary top after recent extended decline through the lower support line of a trading channel. This break indicates a deeper and larger correction so we labeled end of a five wave rally in wave (1) followed by wave (2) in progress that may reach levels around 0.9400 before uptrend resumes. However, keep in mind that larger trend is still up.
AUDUSD 4h Elliott Wave Analysis
Elliott Wave Education: Impulse Extension
Most impulses contain what Elliott called an extension. An extension is an elongated impulse with exaggerated subdivisions. The vast majority of impulses contain an extension in one and only one of their three actionary subwaves.
The fact that extension typically occurs in only one actionary subwave provides a useful guide to the expected lengths of upcoming waves. For instance, if the first and third waves are about equal length, the fifth wave will likely be a protracted surge. Conversely, if wave three extends, the fifth should be simply constructed and resemble wave one. In the market, the most commonly extended wave is wave 3.
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