AUD/USD: ABCD and Gartley Patterns Emerge

By: Andrei Tratseuski

Technical aspect of the AUD/USD is pointing for the pair to rally in the near term future. Currently we have the following scenario, risk appetite is on despite overwhelming pressures. With risk taking the market by the hand, we of course are positive on the riskier currencies. The better performer for a considerable amount of time was the Aussie. Given their healthy interest rate of 4.50%, the currency is a poster child for upper movement. Carry trade does not get too much attention these days, however, investing in the Aussie will hold true when markets are no longer in risk aversion mentality.

Nonetheless, let's look at the short term scenario for the Aussie. We turn to our ABCD/Fibonacci extensions to derive a valuable points that the pair can head to. We believe that a solid point of support has been established in the AUD/USD at 0.8630, point A. Given our strategy, line AB is equivalent to CD, given our point of exit at 0.8745. Point D, is always a point of exit. Looking closer, we find that BC line Fibonacci extension of 161.8% falls at the exactly same level as CD line of 0.8745. Furthermore, XA Fibonacci retracement of 61.8% is around the same level. In retrospect, our strategy calls for AUD/USD to rise in the near term. In addition, if we want to play the pattern to the downside we find a perfect Gartley pattern. XA retracement of 61.8% lies at the same level as 161.8% extension, giving us a clear point of reversal. In retrospect, there is a probability that the pair could rise due to ABCD pattern, followed by a drop due to emerging Gartley pattern.