On January 28th, 2015, we showed you our long-term outlook on EUR/AUD, suggesting that the pair is probably in wave Y down within a W-X-Y double zig-zag correction. Here is how the forecast looked:
The pair did not fall as low as we thought it would, but wave Y did make a new low below 1.38, which was the minimum requirement for the count to stay valid. EUR/AUD fell to 1.3676 and then bounced up to 1.5276. Let’s take a look at the weekly chart once again.
After every correction, the larger trend resumes. So, the recent recovery seems quite natural, since the larger trend is up and the W-X-Y correction ended at 1.3676. It looks like EUR/AUD shows a perfect 5-3 Elliott Wave cycle. If this is correct, the pair should continue higher and probably reach the 1.60 mark in the long run. But let’s examine the wave structure of the latest 20-cent advance on a 4-hour chart.
And the 4-hour chart confirms our long-term bullish expectations. It shows a nice five-wave impulse to the upside, which means that once the corresponding three-wave correction is over, EURAUD should head north again. If we go back to the weekly chart, the forecast would look like this:
In our opinion, this seems like a great opportunity for Forex investors, who are looking for pairs with great growth potential. Two five-wave sequences in a row mean EURAUD is definitely one.