Thread: AUDUSD: A wedge pattern in formation?

AUDUSD follows a clear downward trend, but in the last stage it has started to move laterally. Is it forming a wedge pattern? If confirmed, we could see a fall of up to 450 pips after breaking the lower border of the wedge. Let’s see what happens. Mr EUR

The lower limit of the wedge has already been broken, but better wait for confirmation before entering. Mr EUR

Confirmed again, now you can go in short. Target: between 300 and 500 pips. Let’s see. It’s falling from the lower edge of the wedge, supported by Fibonacci’s 61.8 recoil and EMA 55. Mr EUR

AUDUSD is still in a downward trend, although recently the price has moved in range. Will it be forming a wedge? If confirmed, we could have a drop of 450 pips once it breaks the base of the wedge. Let’s wait to see what happens. Mr EUR

The wedge support has already broken, but don't go ahead, you have to wait for confirmation. Mr EUR

Confirmed again, you can open shorts. The target goes from 300 to 500 pips. See how it goes. It is falling from the base of the wedge, touching the level 61.8 of Fibonacci and the EMA 55. Mr EUR

I see that some people still don’t understand what a wedge pattern implies. It’s not just drawing two lines and praying. You have to see volume, context, previous impulse and additional validations. If you do it wrong, you end up entering just before a false break. If you don’t know clearly how to identify the wedge’s limits and inclination, you better not operate on it. You’re playing analyst with rules drawn on napkins. And the market doesn’t forgive improvisation.

I want to thank those who have commented in private for their analysis of this possible wedge in AUDUSD. It is very enriching to see different interpretations. Although we do not all agree, the dialogue helps to fine-tune the reading. That said, I still think that the break is legitimate. Lower pressure remains and the price has not shown intention to go back. If it remains below the broken support, my bias will remain short.

450 pips down? Yes, it may sound ambitious, but if you bother to look at the daily and weekly chart, you will see that there is room for that tour. Especially if the dollar is strengthened as it seems. The problem is that many want to enter without understanding the macro context. It’s not just a question of seeing a pattern. You need to know what supports it. If you don’t even know where the Federal Reserve is this week, don’t open positions.

Some ask me if this wedge is valid even if it does not have a lot of volume. Honestly, in Forex the volume is relative, so I focus more on price structure and technical confluences. In this case, the EMA 55 and the 61.8 regression are serving as a guide. And most importantly: the break was given with strong sail, without exaggerated wicks. For me, that is sufficient confirmation.