Bearish Bat confirming the Waves on AUDCAD?

Since the beginning of June, a Wolfe Wave has appeared in AUDCAD and has gone through all 5 waves with last extending outside of the wedge. This first 4 waves of the Wolfe indicator have followed the BC and CD line of the harmonic pattern and both ended at the same level giving the possibility of a reversal area.

Technical traders using only the harmonic pattern would look to go short but when combined with the Wolfe Wave, some traders may look to hold out until the price retraces back into the wedge area to confirm the reversal in trend.

A stop loss can either be placed just outside of the wedge or above the top of the last wave and point D on the harmonic pattern. Many traders will also look to use trailing stops to maximise winning while limiting losses on the trade.

If we see a break above point D before the price has traded within the wedge the pattern is void according to chart theory and any orders in the market should be removed.

 

Happy trading

Alexander Flood

Technical Analyst

www.fxtradingstrategies.net

 

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