S&P Leads- Usd Follows
In the “Aussie Signal Off S&P Support” article from the past week we mentioned a possible move lower on U.S. dollar against the majors, if S&P futures could find support around the 1080 – 1083 zone. The bottom was hit at the1082 area, as our chart below shows, from where the market as already traded higher, for almost 30 S&P points since Thursday.
The chart is showing a bullish price structure with black wave V) in progress, after the previous wave III) top was taken out. That followed the 1082 wave IV) lows that were established on Thursday.
From an Elliott Wave perspective; once we can count a clear five waves in one direction, at least a three wave corrective pull-back is what should follow.
As such, new short dollar positions are currently not recommended, considering the current S&P levels, as we can expect some changes on the major pairs once the S&P corrective pull-back follows through.
From an Elliott Wave perspective, wave five is an impulse wave, which means that is structured by five smaller waves. Once we count five waves in wave five position, it should be a signal that the trend can change direction quite quickly.
On the chart above we can count a completed five waves up, in wave v that we were looking for since Thursday, which suggests that a top may be very near.
Overall, traders should be very carefully with establishing new Australian dollar long positions. It is better to wait on a new opportunity, to buy at support and sell at resistance.