German DAX and Aussie dollar look weaker: Elliott Wave

The stock market is looking weak for the last 24-48 hours. We have seen DJIA, S&P 500 and Nasdaq all down between 0.2% and 0.6%. The similar pattern was also seen during Asian session with Nikkei and HSI down 2.17% and 0.76% respectively. German DAX also reversed significantly lower in this week so it seems that stocks are turning slightly bearish, but most likely only for another correction. On the German DAX daily chart I see wave four unfolding back to 8970/80 region. German DAX (Dec 2013) Daily Elliott Wave

I am not really sure how the weak stock market will impact the EUR/USD, simply because correlation is not working for the last couple of months. However, I see weak AUD/USD, which I believe will stay bearish and even accelerate to the downside as long as stocks will be in pullback mode. So for shorts AUD/USD may not be a bad idea.

DAX vs EUR vs AUD 4h

On hourly chart of AUD/USD we have seen a nice, perfect reversal from 0.9145 two sessions back where wave E completed a running triangle in wave B). Pair is now already at the lows so we are tracking wave C) down that should by made by five smaller waves. As such, we expect more downside, to 0.8950 possibly even to 0.8900. Any small pullback later today could stops at 0.9050/60 region

AUD/USD 1h Elliott Wave

About the Author

Gregor Horvat, based in Slovenia, has been in the forex markets since 2003. He is a technical analyst and individual trader who has worked for Capital Forex Group and TheLFB.com. He also is founder of forex services on www.ew-forecast.com. EW-Forecast.com provides technical analysis of the financial markets, highlighting behavioral patterns based on the Elliott Wave Principle (EWP). Website: http://www.ew-forecast.com/

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