Global stocks are lower, following the bearish pattern from the US session yesterday when DJIA closed down 0.47, S&P500 -0.59 and NASDAQ -0.38% on the session. It looks like market is preparing for winding down the US Federal Reserve’s easy money policy. Metals are also down, in-line with weak commodity currencies such as AUD and NZD, while EURUSD and GBPUSD did not go far in the last 24 hours.
Reason for weak AUD is the RBA where members noted that there is room for further rates cut, but they also could look for different policy if economic data would improve. Looks like they are in wait and see mode at the moment.
However AUDUSD is weakening right now and that’s what matter the most. From an Elliott Wave perspective we see current decline impulsive, which means that trend is bearish on the intra-day charts, so any rallies are expected to prove corrective and therefore be short opportunities. With that said, we would love to see a three wave rally, an A-B-C retracement back to 0.9130 resistance from where new sell-off is expected; from former wave four. Now the only question is when pull-back will occur!? Unfortunately we can’t do much, just need to wait it. Traders should also keep an eye on 0.9231 figure where bearish trend would be invalidated.