Fib Retracements suggest confluence of support for AUDUSD at 3 levels
Some support levels predicted by Fib Retracements for AUDUSD
AUDUSD has corrected quite a lot. It makes sense for both bulls and bears to look for support – one camp to look for bullish reversal and the other camp to take profit. Fibonacci retracement lets us predict which levels to look at. Knowing how good fibs are, lets look at what they say. But before that, lets visit some of the following:
- Posts here showing how predictive fibs are for Hang Seng Index and Straits Times Index
- Recollect the concepts involved for Fibonacci Retracements to capture turning points
Establishing the flow for AUDUSD; Confluence at Points 3, 4 & 5
When we look at turning points on the AUDUSD monthly chart, there are two flows that can be used to determine fib retracement levels: AC and BC. Comparing both, AC appears to be superior. Between Points 1 and 2 which are both 23.6 percent retracement ratios determined by both flows, Point 1 drawn with the help of AC is a superior fit. If we place our trust on AC to deliver a good prediction for the next support, it will naturally be 38.2 (Point 3).
Anyhow BC cannot be totally ignored. It tells us that the lower levels gets increasing stronger because the levels predicted by both flows confluence together. The tighter the confluence, the more significant support becomes.