I would like to remind all the MC Community that it is also important to keep an eye on the Forex Market as there are often nice opportunities for both the short term and the long term trend. The currency market is about §5 trillion a day trade volume which is about 200 time bigger than the NYSE which trades a volume of about §22 billion each day. It is a 24 hour market of huge liquidity that can not be controlled and with minimal or no commissions. Here is an update on the Japanese Yen & Australian Dollar which should reach important turning points in the coming weeks.
The Japanese Yen and Gold topped in 2011 almost at the same time. The structure of the Yen is relatively easy as we can clearly identify an impulse wave from 1976 to 1995 (Wave (A) or alternate green count Wave (1)) followed by a corrective pattern which can be either a Triangle or a Flat Pattern. I prefer the green count with the corrective Flat Pattern as it reflects more proportionate wave relationships compared to the black count. The green Wave B of the Flat Pattern has an exact Fibonacci relationship between its subwaves a and c (c=1.618 x a) whereas the black Waves A and C have no Fibonacci connection.
Whatever the case, the Yen was due for an impulsive downmove from its 2011 top. The structure of this impulsive downmove is composed of 5 waves (1-2-3-4-5) and you can notice that Wave 3 is extended and is made of 5 subwaves (i-ii-iii-iv-v). The Yen is currently in Wave 5 and when Wave 3 is extended, Wave 1 and Wave 5 are often equal in magnitude or have a Fibonacci connection. The Japanese Yen is now very close to the support trendline from 1998 bottom and also to the Fibonacci convergence supports. I think that it should find a bottom very soon and rebound to the upside. The structure of the rebound should indicate whether it is an impulsive or a corrective move and therefore indicates if the extreme of the green Wave C has been reached or not. There are two levels that could be interesting to watch, 0.92110 that matches with an equality between Wave 1 and Wave 5 and 0.89980 that is 0.382 retracement of the huge impulsive move from 1976 to 1995.
Here you can see that the USD/JPY structure has an inverse relationship with the Yen. The USD/JPY pair just broke above a strong resistance and should be in a Wave (5) of (5) of (I).
On a closer view you can see that the current Wave (5) of (5) looks like an Expanding Wedge Pattern (each blue wave of the Expanding Wedge is composed of 3 subwaves).
The current move from 2011 low is an impulsive one so I am expecting a minimum of 3 waves to the upside. In case of a 20 Years Flat Pattern, the USD/JPY could go much higher with a Wave (C) that has approximately the same magnitude than Wave (A).
On the following chart you can see that USD/JPY made a complex corrective pattern for blue Wave (4) and is currently forming the final Wave (5) of the Expanding Wedge Pattern. Once the pattern is complete the USD/JPY should reverse down into a correction.
On the intraday chart you can see that Wave 3 is extended and has more upside potential before the Yen reverses down into a Wave 4.
The Australian Dollar is strongly connected to the Metal and as you can see on the following medium term chart the AUD/USD pair is following a classic Elliott Wave structure with an impulsive move composed of 5 waves (1-2-3-4-5) and followed by a corrective Flat Pattern (A-B-C). The final Wave C is an ending diagonal and AUD/USD should plunge into a final Wave v of C which should mark the end of Wave 2 of a higher degree. Wave 2 is clearly composed of a corrective pattern (A-B-C) and should be followed by an impulsive Wave 3 which should propulse AUD/USD to new highs. The extreme of Wave 2 should generate a great buy opportunity for many Forex traders.
On the AUD/USD daily chart you can see that the pair broke down of a corrective channel which is characteristic of a Wave 3 down. This confirms a Wave C in progress which should be composed of 5 waves:
The intraday chart is showing that AUD/USD is currently in a Wave iii of 3 and has still lot of downside potential.
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