AUD/USD Elliott Wave Analysis – March 24, 2014

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AUD/USD Elliott Wave Analysis - March 24, 2014

AUD/USD is in the middle of a corrective ABC pattern on its 1-hour time frame, as the pair is forming an ascending triangle formation. There’s a clear resistance zone around the .9100 major psychological level while the lows of the price can be connected by a rising trend line.

AUD/USD Elliott Wave Analysis - March 24, 2014Price just came off a test of resistance, a few moments after China printed a weaker than expected HSBC flash manufacturing PMI reading. AUD/USD might still make its way back down to the rising trend line for a quick bounce before heading higher or establishing direction for a breakout.

Stochastic just moved down from the overbought area, indicating that sellers are currently in control. However, the oscillator is making an upward crossover, which could be a hint that small retracements might take place.

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AUD/USD Technical Outlook

With that, AUD/USD might be in selloff mode for now, at least until the pair touches the trend line above the .9000 major psychological support. This could be a strong buy area, with stops located below the .9000 mark.

The .9100 handle might still hold as resistance in the near term, as AUD/USD completes another leg of the corrective wave pattern. Sellers could jump in at this point and take the pair back down to the trend line support or push for a strong breakdown, depending on how risk sentiment fares.

For now, Russia’s sanctions are affecting AUD/USD and the rest of the riskier comdoll pairs, keeping any strong rallies at bay. Further conflict could trigger a downside break and a deeper selloff, indicating a longer-term downtrend for the pair. On the other hand, signs of a resolution among Russian and Western leaders could put risk appetite back on the table and spark a rally for the pair. 

To contact the reporter of the story: Marco Roemer at marco@forexminute.com