Elliott Wave Analysis of AUD/USD Australian Dollar 24 May 2010

There are two interesting developments in a chart that makes me sit up and take notice. One is an extending fifth wave, The other is a failed fifth wave. The Australian Dollar or AUD/USD had posted a failed fifth wave last week and I had warned you to look for a sell off. Sure enough the markets delivered, and boy, what a move it was! Don’t despair if you missed that initial move. Any recovery towards 0.8550/70 will find new selling. The downside objective in the coming few weeks is around 0.7750/70. But as always you have to bear in mind two important rules in order to make money. First, be patient until you find that sweet spot where your risk can be minimal (or at least affordable) After all, we are dealing with financial markets that are traded by thousands of traders across the world, and fund managers with huge financial muscle. Those guys can take large losses with just a shrug of the shoulders. But most of us cannot. So timing is of the essence. Second, your position size matters. No matter how confident you get, never take a position that is bigger than the size your capital can handle. Good luck.