As we can see on AUDUSD 90 min chart pair has been in a sideways consolidation since 0.9198 low (5.2.2014). We believe FLAT structure is in progress which started from 0.9198. To be more precise we are currently in wave C of FLAT. Wave C has taken form of Ending Diagonal and we are nearing completion of wave ((iii)) of C. Pull back in wave (( iv )) is expected soon which can test 38.2 – 50 fib retracement zone of proposed wave (( iii )) before the next leg higher to complete wave C
FLAT is an Elliott Wave corrective structure composed of 3 waves i.e. A-B-C (3-3-5), which means waves A & B are 3 wave structures and wave C is a 5 wave structure. FLAT patterns come in three types, regular,expanded and running .This one is regular, which means wave B is a very deep retracement of wave A (90% or more)) and wave C is expected to end above the ending point of wave A (0.9409)
Wave A starts from 0.9198 low and terminates at 0.9409 high
Wave B starts from 0.9409 high and terminates at 0.9205 low
Wave C starts from 0.9205 low, and is still in progress
As we are still expecting a pull back in wave (( iv )) and another leg higher in wave (( v )) to complete the Ending Diagonal (see figure 2), it can end any where between C = A (0.9415) to C = 1.236 x A (0.9465) before the structure completes. 5 swing structures need to end with momentum divergence so we would look for divergence in RSI at the final high in price and make sure it is not erased to avoid further extension. Once Ending Diagonal and FLAT structure has completed, expect the pair to break rising diagonal trend line and turn lower at least in 3 waves. Thank you for reading this blog and good luck with your trading.
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