Australian Dollar Weekly Chart Elliott Wave Count Review

The Australian dollar is not in the US dollar basket but it is important to watch as it follows the commodity cycles. During the years I worked on it off and on as the wild gyrations were far above my pay grade.  Once we line up the 2001 bottom with the peak of the US dollar and the bottom in gold, The AUD bullish cycle was a zigzag with one mother expanded “B”  flat ending with a vertical drop that shocked may gold stock investors.  “C” waves of flats end like this as with zigzags this is reversed most of the time.

For gold to crank up dramatically the Australian dollar has to crank up as well. This is not what I see about to happen as the present rally sure fits great into another Elliott Wave triangle.  A triangle in a 4th wave bear market rally is fooling many into thinking the bull market in gold is imminent.

At this time the AUD is already heading down and it should not take that long before it trashes the previous wave 3 low in Intermediate degree. It may take the rest of the summer and some of fall to play out, but I sure would never want to bet long on a 4th wave bear market rally.

I have a pretty clean 5 wave decline so far, with diagonal leanings but it does look good as an impulse. One Intermediate degree drop is all we need to help confirm the entire decline.

The AUD also peaked in 2011 and has followed gold and gold stocks down together.   You can’t get a better correlation to Gold than when you look at the Australian Dollars big trends. So is gold going to suddenly soar while the AUD keeps heading south? I doubt it, as it would be truly amazing if it did.

The COT report does not show the commercials in a net a short position, but they are long by a small amount but not to any extreme just yet. This may happen at the .60 cent price level. A huge double bottom would be setting up, and a bullish H&S would show up as well.

The perfect setup for a major reversal will come folks, when the talking heads are all spewing out bearish fundamentals concerning the Australian Dollar. Welcome to the club as our Canadian dollar will tag along with the AUD  during the next decline.

Given the history how fast the AUD can crash, what may be bullish looking right now, by next week it could trash my wave 3 bottom.

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