Hello traders. Welcome to another blue box post where we cover recent trades that Elliottwave-Forecast members took. This post is for educational purposes; to let readers see how we trade the blue box on all or charts across all the time frames. The spotlight will be on the AUDJPY currency pair.
The Blue Box setup is not a standalone system—it always has a background story. However, the common denominator is this: we prefer trading in the direction of the dominant trend, supported by a clear Elliott Wave sequence. In a bullish sequence, we look to buy the dips from the Blue Box. Conversely, in a bearish sequence, the Blue Box helps identify the optimal selling zone.
AUDJPY completed a 5-wave impulsive cycle from March 2020 to July 2024. According to Elliott Wave Theory, a 3-wave correction typically follows a 5-wave trend. Shortly after the bullish impulse ended in July 2024, a 3-swing corrective pullback began. The first leg of the pullback ended in October 2024, followed by a bounce forming the second leg. The third leg started in November 2024 and eventually breached the low of the first leg.
After this breach, we outlined for members where the bearish cycle could potentially end. At that point, we explained how we planned to position for a long-term buy. However, before reaching the extreme, the pair bounced to correct the cycle from November 2024. This bounce unfolded as a 3-swing zigzag structure. Based on this pattern, we decided to sell toward the extreme of the cycle that started in July 2024.
AUDJPY Bearish Setup: 4.29.2025 Chart Update
AUDJPY, H4
On April 29, 2025, we shared the 4-hour chart shown above. The pair was undergoing a clear corrective bounce. Due to the significant overlapping within the structure, we expected the bounce to fail below 95.796. As a result, we identified and shared a Blue Box zone spanning from 93.51 to 96.748. This indicated that members could enter short positions at 93.51, with stops placed at 96.748.
From this Blue Box, we anticipated at least a 3-swing decline, if not a full 5-wave sell-off, to follow.
AUDJPY Bearish Setup – 05.31.2025 Update.
AUDJPY, H4
As the chart above shows, AUDJPY reached the Blue Box zone where members entered short positions, and the pair began to decline. This is currently an ongoing trade. After a 5-wave drop from the Blue Box, the pair bounced in a 7-swing corrective structure and is now turning lower again.
We expect the pair to break below the 91.6 low and move toward the 89.87–88.93 zone, where members will be in a better position to manage their trades. Our typical approach involves taking partial profits by closing half of the position and moving the stop on the remaining half to breakeven.
In the coming days or weeks, we anticipate at least a 3-swing decline toward 89.87–88.93—if not a full 5-wave move that breaks below the April low. This exemplifies our preferred trading strategy.
Read a similar setup on GBPUSD with over 400 Pips gained and all targets reached.
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