Hi, this an update to the idea: Why AUDUSD is Likely to Trade Lower
[A] Since the idea was posted, price has consolidated retraced to as high as 0.8850. At time of writing, price is trading at 0.8710s and is showing intention to breakout on the downside, forming the Wave 3 (strongest wave) of an Elliott 5 Wave Pattern.
In short, price action indicates that it is likely that the break out of this massive Head and Shoulder Pattern, during this coming week.
Break Out Condition: When price trades below 0.8670.
Stop Loss: Above 0.8765.
Taking Profit: Level 1: 0.8400 Level 2: 0.8200
Risk: There is always a risk of a false breakout or pullback. However this risk is much lesser now, compared to when the idea was first posted.
Plausible Fundamental Driver of Bearish Price: General market expectations of US Interest Rates to increase versus expectations of Australian Interest Rates to hold, leading to the unwinding of leveraged USD/AUD carry trades. Weaker China economic data and lower commodity prices are also contributing factors.
1) Price has traded well pass Take Profit Level 2 of 0.8200.
Therefore this idea is now completed and closed.
2) Of course, some traders may consider of holding on to shorts but it is all at their discretion.
3) Quick glance at current charts indicates a broadening formation, which is one of the difficult patterns to trade.
These is because breakout happen either up or down with no clear guide in terms of timing, so personally I would stay out.
1) Price has traded well pass Take Profit Level 2 of 0.8200.
Therefore this idea is now completed and closed.
2) Of course, some traders may consider of holding on to shorts but it is all at their discretion.
3) Quick glance at current charts indicates a broadening formation, which is one of the difficult patterns to trade.
These is because breakout happen either up or down with no clear guide in terms of timing, so personally I would stay out.
Broadening Formation References>
thepatternsite.com/rabfa.html
research.scottrade.com/public/knowledgecenter/knowhownews/intheknow.asp?nlid=6f27c8c611af48fe8486b79432b85aa6
investopedia.com/articles/trading/07/broadening_pattern.asp