Two months ago, we posted an article here alerting traders to watch for shorting opportunities with the Australian Dollar. The trade turned out well, and the next opportunity to watch for on any time frame higher than intraday is a possible bounce from support as described below.
Stepping back to view the big picture, and starting mainly with chart geometry, we see that the Australian Dollar is testing important channel support this month. In addition, last month produced a "9" exhaustion signal from the proprietary nine-five indicator developed by Wave59. Price should react with a bounce near the channel boundary on the monthly chart, or perhaps near the 1/8 harmonic (the dotted line) below the main boundary.
In fact, there are reasons to believe price should poke at least slightly below the main channel boundary. The move down from the summer high does not yet look like a completed five waves (although that is not a certainty). Also, the most prominent support targets are in the area of 0.8383 to 0.8425, a bit below the early November low.
The uncertainty about whether minor wave v can reach the targets drawn on the weekly chart suggests that any short trade other than intraday carries fairly high risk. The better opportunity probably will be to wait for the expected wave (ii) bounce, and traders should keep in mind that it can start from higher than the support levels shown.
A similar opportunity may be approaching with the Euro, and readers can view a chart summarizing that possibility at our website.